Beruflich Dokumente
Kultur Dokumente
Plaintiff EMF Swiss Avenue, LLC (EMF or Plaintiff) files this Original Complaint
and Application for Temporary Restraining Order, Preliminary Injunction, and Permanent
Injunction against Defendant City of Dallas (the City or Defendant). Plaintiff respectfully
I. PARTIES
company with its principal place of business in the city of Dallas, Dallas County, Texas. EMF is
the owner of 4217 Swiss Avenue, Dallas, Texas 75204 (the Property).
organized and existing under the laws of the State of Texas. The City can be served with process
through its mayor, clerk, secretary, or treasurer at the Citys offices at 1500 Marilla St., Dallas,
Texas 75201.
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3. This Court has federal question jurisdiction pursuant to 28 U.S.C. 1331 because
this suit concerns the federal question of whether the City of Dallas has committed a taking
against EMF under the Fifth and Fourteenth Amendments to the United States Constitution.
This Court has supplemental jurisdiction over EMFs additional claims pursuant to 28 U.S.C.
1367.
4. Plaintiffs claim for injunctive relief is authorized by Rule 65 of the Federal Rules
of Civil Procedure and by the general legal and equitable powers of this Court.
events or omissions giving rise to these claims occurred in the Northern District of Texas.
III. INTRODUCTION
6. This lawsuit seeks relief narrowly-tailored in scope and of the highest urgency.
The City of Dallas (hereinafter, the City) has, sua sponte and prematurely issued, a Stop Work
Order precluding all construction of any kind on a multi-million dollar development Property
located in Dallas County. The preclusive effects of this Stop Work Order are disastrous and
have caused and will continue to cause irreparable harm to EMF and the construction project on
its Property through indefinite construction delays, dispersal of the construction workforce,
potential lender defaults, and lost construction capital and pricing. The need for injunctive relief,
therefore, is immediate and necessary to enjoin the Citys impermissible taking of EMFs
Property in violation of EMFs rights under Texas law and the United States Constitution.
permits from the City to construct a 253-unit apartment complex (the Project) at 4217 Swiss
Avenue, Dallas, Texas 75204 (the Property). EMF is the owner of the Property. EMFs
Project will bring badly needed high-quality rental housing to the City, while increasing the
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Citys density and walkabilityboth of which are deemed desirable traits by almost all urban
planners. EMF successfully secured the necessary building permits from the City. In good faith
reliance upon those City-issued permits, EMF began investing millions of dollars to develop the
Project, including commencing construction on the Property. Long after the Project on EMFs
Property began (including construction), a local homeowners association challenged the permits
complaint concerning the validity of the permits issued by the City for the Project on EMFs
Property to the Director of Sustainable Development and Construction for the City of Dallas (the
Director). Acting on behalf of the City, the Director rejected the HOAs challenge.
9. Following the Directors rejection of its complaint, the HOA then appealed that
decision to the Board of Adjustment for the City of Dallas (the Board). The Board
overwhelmingly upheld the Directors decision and confirmed that the City had properly issued
the permits for the Project on EMFs Property in a 4-1 vote. EMF was never joined as a party to
the proceedings before the Director and the Board, nor did the HOA ever seek any affirmative or
10. In further and reasonable reliance on the decisions by the Citys Director and the
Board upholding the validity of the already-issued building permits, EMF continued to invest
massive resources and employ hundreds of workers to construct the Project on its Property.
Despite being fully aware that building permits had been issued for the Project on EMFs
Property, the HOA at no time attempted to stop, enjoin, or suspend construction of the Project by
requesting or obtaining injunctive relief against the City, EMF, or anyone else. To dateand
acting in reasonable reliance on the building permits issued by the City, confirmed by the
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Director and affirmed by the Board EMF has spent over $13.9 million dollars in its
11. Following the Board decision upholding the validity of the permits issued by the
City, the HOA initiated a state court action against the City and the Board appealing the Boards
decision that the permits were valid (the HOA Suit). There are two critical points regarding
the HOA Suit: (1) the HOA did not seekand did not obtainany injunctive relief to suspend
construction of the Project on EMFs Property; and, (2) the HOA did not name EMF or any other
private party (such as EMFs parent company or its construction contractor or sub-contractors) as
parties to that suit. Instead the HOA sued only the City and the Board, and it did not seek
injunctive relief against either. The HOA alleged that both the City and the Board had both
abused their discretion in issuing and affirming the building permits for the Project on EMFs
Property.
12. Although never named as a party by the HOA, EMF ultimately intervened in the
HOA Suit and asked to be heard. However, just three days after EMF intervened in the HOAs
State Court Lawsuit on September 11, 2017, the HOA was granted summary judgment on its
challenge to the validity of the building permits issued by the City and affirmed by the Board for
the Project on EMFs Property. Butagain, and criticallythe HOA never requested and was
not granted any injunctive relief that would prevent construction from continuing. Moreover, the
State Courts September 11, 2017 Summary Judgment (the State Court Judgment) does not
contain any command or declaration to stop work on the Project on EMFs Property, not does it
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order the City of Dallas or the Board to take any actions regarding the building permits for the
Property.1
13. On September 14, 2017, three days after the State Court Judgment was rendered,
the Cityon its own initiative and without any order from the State Trial Courtissued a
stop work order (the Stop Work Order) that required an immediate halt on construction of
the Project on EMFs Property. The City did not, and has not, disclosed its basis or reasoning for
issuing this Stop Work Order against construction on the Project. The ramifications of the Citys
sua sponte Stop Work Order are devastating and irreparablenot only to EMFs business but
also to numerous innocent third-parties. The irreparable harms flowing from the Citys Stop
Hundreds of blue collar workers hired to build the Project will abruptly lose
their paychecks;
Unable to complete the Project, EMF could potentially default on its HUD
loan for the Project, and consequently the other HUD loans EMFs parent
company, Encore Multi-Family, LLC (Encore), could be in jeopardy and
prevent Encore from receiving HUD or FHA loans in the future;
Foreign investors in the Project will potentially lose their visas secured
through the federal EB-5 program;
EMF risks the loss of negotiated and agreed-upon pricing for labor and
materials provided by its subcontractors and vendors, particularly in the wake
of the reconstruction efforts in South Texas rebuilding from the devastation
caused by Hurricane Harvey, which has resulted in labor and material
shortages and construction cost increases;
1
A true and correct copy of the Final Judgment is attached hereto as Exhibit 1-B, and
incorporated herein by reference.
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EMF will incur extremely costly interest payments and penalties on its HUD
loan and its private loans; and,
14. The Stop Work Order issued by the City was not required by the State Court
Judgment. Indeed, in open court the State Court Judge repeatedly confirmed that his State Court
Judgment did not contain an injunction (or cause the effect of injunctive relief) and did not
require the City to enter a Stop Work Order against the construction on the Project at EMFs
Property. In sum, no court compelled or mandated that the City issue the Stop Work Order, and
the City bears sole responsibility for its independent decision to do soa decision which wholly
disrupted the status quo as of the time the State Court Judgment was entered.
15. The issuance of the Stop Work Order was an independent act taken by the City
that has deprived EMF of numerous rights and constitutes an improper taking of EMFs
property. Ostensibly facing extreme political pressures locally, the City placed the entire Project
at risk by acting on its own to issue a Stop Work Order against the Project during the middle of
construction when over $13.9 million has already been expended on that construction. In turn,
the City has committed an impermissible taking of and against EMFs Property, and has
materially reduced (if not completely destroyed) both the value and utility of EMFs Property,
which now contains a partially completed construction Project on which the City has forbidden
further work.
16. In addition to committing a taking of EMFs Property, the Citys sudden and
independent issuance of the Stop Work Order deprived EMF of important substantive and
procedural rights for which EMF lacks any adequate remedy at law. For example, given that no
injunctive relief was ever sought by the HOA or issued in the HOA Suit, the State Trial Court
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enjoys plenary power for, at minimum, 30 days from the date the judgment was signed until the
judgment becomes executable. By issuing its Stop Work Order a mere three days after the State
City deprived EMF of its ability to maintain the status quo (e.g., the filing of post-judgment
motions and an appeal secured by a supersedeas bond, as are its lawful rights). In short, by
needlessly issuing the Stop Work Order the City deprived EMF of the ability to continue work
on the Project at its Property during the pendency of an appeal of the State Court Judgment and
17. There are important and severe public policy implications to the Citys decision to
issue the Stop Work Order against a $60 million project in the middle of construction. The
Project being constructed on EMFs Property received all necessary building permits from the
City of Dallas, and the validity of those permits was subsequently affirmed by the Citys Board
of Adjustments. Taking the City at its word and in reliance upon these prior approvals, EMF
commenced construction on the Project, which, when completed, will bring desperately needed
high-quality rental housing to the Citys core (increasing the Citys density and walkability in the
process). Despite being fully aware of EMFs multimillion dollar investment in the Property, the
City has now issued a Stop Work Order without being compelled to do so by any court. Against
this chaotic and uncertain backdrop, no rational developer will want to commit millions of
dollars to a construction project when the City could needlessly issue a stop work order without
any requirement for doing so. And this is all the more true given the stiff competition for
development dollars that the City of Dallas constantly faces from its neighboring cities such as
Plano, Frisco, Irving, Richardson, and Fort Worth. The chilling effect of the Citys Stop Work
Order against the Project on EMFs Property will be significant, as developers will be deterred
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from working in and with a City where a major project can be abruptly stopped 1/3 of the way
into construction.
18. For all these reasons, the Citys Stop Work Order is, at best, premature and, in
substance and effect, an impermissible government taking of EMFs Property. Accordingly, the
Citys Stop Work Order should be immediately enjoined by this Court. Additionally, the Citys
Stop Work Order constitutes an unconstitutional taking of EMFs Property under the United
States Constitution and the Texas Constitution. Finally, the Stop Work Order violates
enforceable promises the City has made to EMF, and is thus separately actionable under the
19. EMF hereby incorporates by reference the paragraphs above as if fully set forth
herein.
development on its Property at 4217 Swiss Avenue. See Affidavit of Bradley C. Miller dated
October 30, 2017, a true and correct copy of which is attached hereto as Exhibit 1, at 5, 6.
Prior to beginning construction, starting as early as 2014, EMF navigated the permitting process
with the City, during which the Project was subjected to the regular, rigorous scrutiny of the
Citys permitting process. Ex. 1, Miller Affidavit at 5; see Affidavit of Don Jones dated
October 30, 2017, a true and correct copy of which is attached hereto as Exhibit 2, at 4. In
November of 2016, the City approved the Project and issued multiple permits to EMF in
connection with the Project. Ex. 1, Miller Affidavit at 6; Ex. 2, Jones Affidavit at 4. As
planned and allowed by the permits, EMF began work on the Project in reliance on the issuance
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of these permits and the Citys promised green light. Ex. 1, Miller Affidavit at 6; Ex. 2,
Jones Affidavit at 4. During the intervening time, EMF invested more than $13.9 million in
21. The HOA lodged challenges to the issuance of the permits with the City, but did
not seek to prevent commencement of construction. Ex. 1, Miller Affidavit at 7. The HOA
complained that the permits should not have been issued because they do not require the Project
to conform to a City of Dallas ordinance addressing residential proximity slopes (RPS) that
allegedly emanate from other distant, non-adjacent properties located in Dallas Planned
22. The Director of Sustainable Development and Construction for the City of Dallas
(the Director) correctly concluded that no RPS applied to the Project or the Property and, thus,
the permits issued to EMF do not require EMF to conform to RPS. Ex. 1, Miller Affidavit at 8.
The HOA appealed the decision to the Board of Adjustment for the City of Dallas. Ex. 1, Miller
Affidavit at 9. After hearing the HOAs appeal, with only a single dissenting vote, the Board
upheld the decision of the Director with respect to the inapplicability of RPS. Ex. 1, Miller
Affidavit at 9.
23. In March of 2017five months after construction began and following the
Boards decision upholding the issuance of the permitsthe HOA filed a lawsuit against the
City of Dallas and the Board seeking a writ of certiorari and judicial review of the Boards
decision under section 211.011 of the Texas Local Government Code in the District Court,
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Dallas County, Texas.2 The case was assigned to the 134th Judicial District Court, Hon. Dale
Tillery presiding (State Trial Court). EMF was not named as a party in the suit.
24. The HOA moved for summary judgment in the State Trial Court on July 20, 2017.
As a non-party to the case, EMF received no notice of the motion or a hearing on the motion.
Yet, the HOAs motion asked the State Trial Court to reverse the Citys decision which could
have had the effect of preventing EMFs work on the Project. The City responded and filed its
own motion for summary judgement on August 1, 2017. Because it was not a party at that time,
EMF was not given an opportunity to defend its substantial investment in the Project on its
Property.
25. Had EMF been included as a Party in the litigation initiated by the HOA, it could
and would have brought to the State Trial Courts attention evidence as to the design of its
Project and its impact in the community, as well as arguments in opposition to relief requested
by the HOA. Despite EMFs necessary role in the case and its noted absence, the HOA Court
held a hearing on the pending motions for summary judgment on August 30, 2017, and
continued that hearing to September 11, 2017. On September 11, the State Trial Court granted
final summary judgment for the HOA and against the City. Ex. 1-B. EMF had intervened in the
case on September 8, 2017, but summary judgment was already granted to the HOA and against
26. In response to the September 11, 2017 Final Judgment, and despite the fact that
EMF, the real party in interest, had not yet been heard from and that the court in the HOA Suit
continued to enjoy plenary power, the City of Dallas sua sponte responded to the Final Judgment
by issuing a September 14, 2017 Stop Work Order to halt all construction at 4217 Swiss
2
A true and correct copy of the Petition is attached hereto as Exhibit 3, and incorporated
herein by reference.
10
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Avenue. Ex. 1, Miller Affidavit at 8. A true and correct copy of the Stop Work Order is
attached hereto as Exhibit 1-C. The Stop Work Order required EMF to immediately halt all
September 11, 2017 Final Judgment in the State Trial Court on September 15, 2017 (Motion to
Stay). On September 18, 2017, the State Trial Court held a hearing on EMFs Motion to Stay,
in which the State Trial Court made clear on the record that its September 11 Final Judgment
contained neither an injunction against EMFs continued construction on the Property or the
Project nor any specific mandate to the City to issue the Stop Work Order. However, the State
28. EMF filed a Notice of Appeal in the State Trial Court appealing the State Trial
Courts September 11 Final Judgment to the Fifth District Court of Appeals at Dallas, Texas
(State Court of Appeals), leading to Cause No. 05-17-01112-CV in the State Court of Appeals.
29. EMF immediately filed a Motion to Determine Supersedeas Security Under Texas
Rule of Appellate Procedure 24.2(a)(3) with the State Trial Court on September 19, 2017.
EMFs Motion requested that the State Trial Court fulfill its ministerial duty to set the type and
amount of supersedeas security in order for EMF to post adequate security and suspend
enforcement of the State Trial Courts Final Judgment during the appellate process before
irreparable harm continued to mount against EMF. The State Trial Court held a hearing on this
Motion on September 22, 2017, and the State Trial Court subsequently issued an Order declining
3
A true and correct copy of the State Trial Courts September 18 Order denying the
Motion to Stay is attached hereto as Exhibit 4, and incorporated herein by reference.
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to set the amount and type of security necessary to suspend its Final Judgment under Rule
24.2(a)(3).4
30. EMF next filed an Emergency Motion for Review Under Texas Rule of Appellate
Procedure 24.4(A) of the State Trial Courts Order Refusing to Set Supersedeas Security in the
State Court of Appeals on September 25, 2017. This Motion requested that the State Court of
Appeals reverse the State Trial Courts abuse of discretion in refusing to set the amount and type
of security necessary for EMF to supersede the State Trial Courts September 11 Final Judgment
during the pendency of EMFs appeal so that EMF before irreparable harm continued to mount
even further against EMF. As of the date of this Complaint, EMFs Motion remains pending in
31. As real party in interest Intervenor, it was EMFs right to maintain the status
quothat is, for work to continue on the Projectwhile it pursued post-judgment motions or
filed an appeal secured by a supersedeas bond within (at minimum) the 30-day period between
the Final Judgment and enforcement of the judgment. However, EMF was abruptly and wrongly
deprived of these rights when the City issued its premature and unnecessary Stop Work Order.
B. The Citys Premature Stop Work Order Places Hundreds of Jobs and EMFs
Enormous Investment in the Project at Grave Risk.
32. The Citys Stop Work Order poses a disastrous and immediate threat not only to
the Project, but also to EMFs overall business operations (including the operations of its parent
and sibling companies), its employees, employees families, and numerous other stakeholders.
Given its size and complexity, the Project requires sophisticated planning, advanced dedication
4
A true and correct copy of the State Trial Courts September 22 Order denying the
Motion to Determine Supersedeas Security is attached hereto as Exhibit 5, and incorporated
herein by reference.
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of resources, the involvement of a large workforce consisting of many men and women,
33. To secure financing for the Project, EMF obtained a loan insured under the United
States Department of Housing and Urban Development 221(d)(4) program (the HUD Loan).
By halting all construction on the Project as a result of the Final Judgment and Stop Work Order,
EMF is in violation of its Regulatory Agreement for Multifamily Projects issued by HUD
(Regulatory Agreement), a true and correct copy of which is attached hereto as Exhibit 1-D.
Ex. 1, Miller Affidavit at 14. The Regulatory Agreement expressly states that HUD may
declare a default (Declaration of Default) under this Agreement if a violation occurs and is not
corrected within 30 days of notice. Ex. 1-D 37(a). If HUD so declares a default, as it likely
will, HUD will notify the lender who is then permitted to declare the whole Indebtedness due
and payable and thereupon proceed with foreclosure of the Security Instrument. Id. 37(b)(ii).
HUD is even permitted under the Regulatory Agreement to unilaterally [t]ake possession of the
34. The ramifications of violating the Regulatory Agreement or its lender agreements,
and ultimately risking being declared in material default thereof, for all Encore entities and their
hundreds of employees, are catastrophic and irreparable. Besides the devastating impact a
default would have on the Project, HUD could potentially also issue a red flag on EMFs
parent entity, Encore, and all its subsidiaries. Ex. 1, Miller Affidavit at 15. Should HUD
decide to issue a red flag, it would immediately freeze the remittance of funds for all other
loans Encore entities have pending with HUD, which could then preclude Encore entities,
including EMF, from participating in both current and future HUD and Federal Housing
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35. EMFs parent entity, Encore, currently has twelve (12) major loans pending with
HUD, all of which could be negatively impacted by the Stop Work Order. Ex. 1, Miller
Affidavit at 16. Encore has already drawn many millions of dollars and committed many
millions more in the form of down payments and land purchase expenditures on a number of
these loans. Ex. 1, Miller Affidavit at 16. This is in addition to the vast sums Encore has spent
on the due diligence required for each of the HUD loans. Ex. 1, Miller Affidavit at 16. The
Regulatory Agreement expressly requires that all relevant permits and licenses must be obtained
before the HUD Loan closes, and EMF expended considerable funds not only on properly
obtaining the issued permits, but also on hiring third-party consultants to confirm that the permits
have been obtained, and that the RPS did not apply to the Property. See Ex. 1-D 7.
36. Further, because of the Stop Work Order, HUD could preclude all Encore entities
from applying for new HUD and FHA loans for the indefinite future, thus depriving Encore of a
vital and irreplaceable funding source. Ex. 1, Miller Affidavit at 17. If all twelve HUD-related
projects are indeed halted as a result of the Stop Work Order, the consequences to Encore
including all of its employees, vendors, and partnerswill be ruinous and irreparable. Ex. 1,
37. Therefore, absent the injunctive relief requested herein, the domino effect flowing
from abruptly halting the Project will have harsh and irreparable effects on the many working
men and women whose employment hinges on the Project. Indeed, approximately 610 workers
currently employed by EMFs contractor and sub-contractors will likely lose employment
because of the Stop Work Order. Ex. 1, Miller Affidavit at 18. These are hourly workers who
depend on the paychecks they earn from their hard labor to support themselves and their
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families. Ex. 1, Miller Affidavit at 18. These critical jobs and their wages will disappear if the
Stop Work Order remains in effect. Ex. 1, Miller Affidavit at 18; Ex. 2, Jones Affidavit at 5.
38. Additionally, absent the injunctive relief requested herein, the Project will not be
able to recover and easily resume construction at a later date. Ex. 1, Miller Affidavit at 19; Ex.
2, Jones Affidavit at 11. Once the team of workers employed by EMF is dispersed, it will be
reconstruction efforts in South Texas arising from the devastation of Hurricane Harvey). Ex. 1,
Miller Affidavit at 19; Ex. 2, Jones Affidavit at 11. Indeed, it is entirely unclear how EMF
will replace all the many sub-contractors and workers whose hiring and organization had been
carefully coordinated and scheduled far in advance. Ex. 1, Miller Affidavit at 19; Ex. 2, Jones
Affidavit at 11. The workers will desperately go in search of other work to support their
families, as they should and must, and the meticulously assembled and scheduled labor force will
be irretrievably lost. Ex. 1, Miller Affidavit at 19; Ex. 2, Jones Affidavit at 11.
39. Further, the Stop Work Order will also have an irreparable impact on EMFs non-
party foreign investors and their ability to legally enter the United States. Ex. 1, Miller Affidavit
at 20. EMF has substantial investors in the Project who are not United States citizens, and who
have undergone, or are presently undergoing, the arduous process of obtaining visas through the
EB-5 program administered by the United States Citizenship and Immigration Services.5 Ex. 1,
Miller Affidavit at 20. Those non-party investorsand those investors familieswho have
already obtained visas contingent on the Project would almost certainly lose them because the
enterprise in which they invested is no longer viable. Ex. 1, Miller Affidavit at 20. Likewise,
5
The EB-5 Program was enacted in 1990 to stimulate the U.S. economy through job
creation and capital investment by foreign investors. See www.uscis.gov/eb-5, last visited
September 15, 2017.
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those investorsand those investors familieswho are in the process of obtaining EB-5 visas
would no longer be able to complete the application process. Ex. 1, Miller Affidavit at 20. In
addition, the work stoppage could create a disruption in Encores Dallas EB-5 Regional Center
and even have a rippling effect on Encores other Regional Centers across the United States. Ex.
1, Miller Affidavit at 20. The consequences for these innocent men and women would be
dismal. Ex. 1, Miller Affidavit at 20. For instance, besides losing their own immigration
status, Encore may not be able to accommodate foreign investors who would like to send their
children to United States colleges. Ex. 1, Miller Affidavit at 20. These potential repercussions
will likely cause great harm to EMF, Encore, and many other innocent, hardworking people if
the Stop Work Order were to continue in effect. Ex. 1, Miller Affidavit at 20.
40. Furthermore, absent the injunctive relief requested herein, significant and costly
work (which has already been completed or partially completed) on the Project will be
indefinitely suspended. Ex. 1, Miller Affidavit at 21; Ex. 2, Jones Affidavit at 7, 13. All of
the grading and underground utilities have been constructed or installed. Ex. 1, Miller Affidavit
at 21; Ex. 2, Jones Affidavit at 7. In addition, concrete grade beams have been completed,
which support the parking structure that is also well under construction. Ex. 1, Miller Affidavit
at 21; Ex. 2, Jones Affidavit at 7. A photograph of the progress of the parking structure is
attached hereto as Exhibit 1-E. The structures and fixtures that have been partially completed
will be exposed to the elements and to the potential theft of metal piping. Ex. 1, Miller Affidavit
at 21. Because the Stop Work Order came with no warning or preparation time, construction
ceased mid-job and the site was not prepared for the work cessation; even if work stops, the job
site should be wound down and secured. Ex. 1, Miller Affidavit at 21. The Stop Work Order
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does not allow for the orderly wind-down of work as it prohibits any activity on the Property.
Ex. 1-C (Stop Work Order); Ex. 1, Miller Affidavit at 21; Ex. 2, Jones Affidavit at 12.
41. Moreover, absent the injunctive relief requested herein, the construction loans
supporting the Project will needlessly impose substantial interest and other penalties on EMF.
Ex. 1, Miller Affidavit at 22. EMF has already drawn millions of interest-bearing dollars on
the HUD Loan, and EMF has also received millions of dollars in separate private funding
currently bearing extremely costly compounding interest. Ex. 1, Miller Affidavit at 22. Any
delay caused by the Stop Work Order will result in additional interest carry expense and
considerable penalties. Ex. 1, Miller Affidavit at 22. The Stop Work Order constitutes a very
severe compliance infraction with EMFs lenders that could ultimately result in the default of
EMFs loans and, as noted, preclude Encore from participating in future HUD or FHA insured
loans. Ex. 1, Miller Affidavit at 22. If the Final Judgment were ultimately reversed on motion
or on appeal, the individual homeowners represented by the HOA would almost certainly be
unable to satisfy payment of the colossal economic damages EMF has incurred and will continue
to incur so long as the Stop Work Order is in effect. Ex. 1, Miller Affidavit at 22.
investors investment. Ex. 1, Miller Affidavit at 23. This sterling track record, made possible
by the hard work of countless good men and women, will be in jeopardy if the Stop Work Order
C. The Stop Work Was Not Required by the Final Judgment and Has Deprived EMF
of its Right to Maintain the Status Quo.
43. The disastrous consequences resulting from the Stop Work Order need not be
suffered by EMF or its hundreds of workers because the Final Judgment manifestly did not
order, require, compel, or even suggest that the Stop Work Order be issued. Indeed, were there
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any confusion as to this point, the confusion was obviated by Judge Tillery, himself. At a
hearing in the HOA Suit on EMFs Motion to Stay Enforcement of Judgment, Judge Tillery
My ruling didnt have a stop orderI didnt order the City to stop work. I
didnt order the construction company to stop work.6
Transcript 11:7-8; 15:25-16:1.7 As Judge Tillery observed, the HOA never sought a temporary
restraining order, a temporary injunction, a permanent injunction, or any other sort of injunctive
relief. The HOA agrees with Judge Tillerys conclusion that the State Court Judgment did not
compel issuance of the Stop Work Order by the City. In its Response to EMFs Motion to Stay,
the HOA stated that characterization of the Stop Work Order as enforcement of [the State]
Courts summary judgment order is incorrect and misunderstands the nature of the proceeding.8
In other words, both the State Court Judge and the HOA have agreed, on the record, that the
State Court Judgment did not compel the City of Dallas to issue the Stop Work Order.
44. The Citys decision to, sua sponte, issue the Stop Work Order was a separate act,
entirely the Citys own, and cannot be justified by suggesting that it was required by a courtas
made clear by the HOAs pleadings and the State Courts own words. Therefore, the issue now
before this Court is not to second guess another courts judgment, but rather the Citys
6
For purposes of clarification, EMF does not seek this Court to enjoin any actions of the
State Court Judge, the State Court Final Judgment, or interfere in the appellate process thereof.
Rather, EMF contends that the Citys Stop Work Order was issued independently of the State
Court Final Judgment and EMF now seeks to enjoin the deleterious effects of the Stop Work
Order or any actions in reliance thereon.
7
A true and correct copy of the transcript of the hearing on Intervenors Emergency
Motion to Stay Enforcement of Final Judgment is attached hereto as Exhibit 6, and incorporated
herein by reference.
8
A true and correct copy of the HOAs Response in Opposition to EMFs Emergency
Motion to Stay Enforcement of Final Judgment is attached hereto as Exhibit 7, and incorporated
herein by reference.
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independent and unilateral act of issuing the Stop Work Order against the Project on EMFs
Property, which has caused and will continue to cause immediate and irreparable injury to EMF.
Indeed, EMF has been deprived of its rights to maintain the status quo during the, at minimum,
30-day period following issuance of the Final Judgment. Additionally, the Stop Work Order
constitutes an unconstitutional taking of EMFs Property under the United States Constitution
and the Texas Constitution, and violates the enforceable promises the City has made to EMF and
V. CONDITIONS PRECEDENT
45. All conditions precedent to the claims for relief set forth herein have occurred,
COUNT I
Inverse Condemnation and impermissible takings under the Fifth and Fourteenth
Amendments of the United States Constitution and Article I, Section 17 of the Texas
Constitution
47. After being subjected to the rigorous scrutiny of the Citys permitting process,
EMF successfully obtained all the necessary Permits to begin construction of the Project.
Thereafter, EMF expended massive resourcesin dedicated time, money, and manpower
expecting that the Project could be developed, in good faith reliance on the Citys representations
and permits sanctioning the Project. During this time, EMF invested more than $13.9 million in
the Project.
48. The calamitous Stop Work Order has deprived the Property of all economically
viable use and value, and has amounted to an unreasonable interference with EMFs use and
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enjoyment of its Property. As of now, no work of any kind can be done on the Property. The
Stop Work Order contains no conditions, limitations, or instructions other than communicating
that no work may be performed on the Property. Additionally, the Stop Work Order has
deprived the Property of all economic value because the total amount of money EMF has
invested in the Propertywhich is over $13.9 million as of nowexceeds the Propertys current
value under the Stop Work Order. That is, the value that has been taken from the Property
overwhelmingly outweighs the value remaining in the Property. The economic impact of the
Stop Work Order has thus been devastating. Additionally, the Stop Work Order has clearly and
expectations. EMF relied on the permitted use of the Property in making its massive investments
in the Project. EMF relied in good faith on the permits it obtained, as well as the decision of the
Director validating the permits, and the Boards upholding of the Directors decision, at
enormous expense. Further, the character of the governmental action is severely problematic as
the Stop Work Order was issued only against EMF and was not required by the court in the HOA
Suit.
49. EMF has a vested property interest in the Property through its ownership and
development thereof.
50. The Stop Work Order was an intentionally performed act by the government,
51. For these reasons, the Citys Stop Work Order is an unconstitutional taking under
the Fifth and Fourteenth Amendments of the United States Constitution and under the Texas
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52. EMF has suffered actual damages, as well as irreparable harm and injury, for
53. EMF further requests a declaration of its rights and any other legal relations of or
COUNT II
Promissory Estoppel
55. The City made promises to EMF, as contained in and expressed by the
construction permits it issued to EMF and the representations it made related thereto, which the
City did not keep. The City issued all the permits EMF requested in order to begin construction
of the Project, upheld the permits through the Directors decision, and then again endorsed the
56. EMF has reasonably and substantially relied on the Citys permits,
representations, and promises, to its great detriment. After receiving the permits and
concomitant assurances from the City, EMF, in good faith reliance on the Citys representations
and permits sanctioning the Project, expended significant and substantial resources in dedicated
time, money, and manpower with the reasonable expectation that the Project could be developed
through its intended completion. After the Directors decision in favor of EMF and against the
HOA, and after the Board upheld the Directors decision, EMF continued to expend vast
resources on the Project in good faith reliance on the Citys decisions. During this time, EMF
57. EMFs reliance on the Citys promises was reasonable and was or should have
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58. The only means of correcting the injustice to EMF is by enforcing the Citys
promises to permit construction of the Project through completion and by nullifying the efficacy
VII. DAMAGES
60. Each of the unlawful acts alleged herein has, in addition to irreparable harm,
proximately caused damages to EMF. EMF has suffered, and will continue to suffer in the
future, immeasurable direct and consequential actual damages, including without limitation:
default on its loans, loss of its workforce, interest expenses and penalties on its loans, damage to
its property, lost profits, damage to goodwill, and loss of the benefits associated with
development of the Property, and, in the alternative to the injunctive relief requested herein,
62. EMF has retained experienced legal counsel to represent it in this action and has
agreed to pay reasonable and necessary attorneys fees and costs. EMF seeks recovery of their
reasonable and necessary attorneys fees pursuant to 28 U.S.C. 2201, et seq., and TEX. CIV.
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64. The requirements for showing entitlement to a temporary restraining order and
preliminary injunction under Federal Rule of Civil Procedure 65 are identical. See Clark v.
Prichard, 812 F.2d 991, 993 (5th Cir. 1987). To obtain a temporary restraining order and a
c. The threatened injury outweighs the threatened harm to the City; and,
d. Granting the preliminary injunction will not disserve the public interest.
Janvey v. Alguire, 647 F.3d 585, 595 (5th Cir. 2011); Canal Auth. of Florida v. Callaway,
489 F.2d 567, 572 (5th Cir. 1974); Elite Rodeo Assn v. Profl Rodeo Cowboys Assn, 159 F.
65. EMF seeks a temporary restraining order and preliminary injunction pursuant to
Federal Rule of Civil Procedure 65. In particular, EMF requests the Court to preliminarily
enjoin the effectiveness of the Stop Work Order issued by the City of Dallas and attached hereto
as Exhibit 1-C and enjoin the City of Dallas and its agents, assigns, representatives, or any
person who is participating or is in active concert with it, who receives actual notice of the
Courts order granting injunctive relief by personal service, telecopy, e-mail, or otherwise from
taking any action as a result of, in furtherance of, or in reliance upon the Stop Work Order or
preventing or delaying EMF from developing or continuing construction upon the Project in any
respect.9
9
Once again, and for purposes of clarification, EMF does not ask this Court to enjoin any
actions of the State Court, the State Court Final Judgment, or interfere in the appellate process
thereof. Rather, EMF contends that the Citys Stop Work Order was issued by the City sua
sponte and independent of the State Court Final Judgment, and EMF now seeks to enjoin the
deleterious effects of the Citys unilateral Stop Work Order.
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66. EMFs request for injunctive relief seeks to preserve the status quo pending this
Courts final adjudication on EMFs claims; the status quo being that, prior to the Citys Stop
Work Order, EMF was engaged in construction of the Project on its Property. Therefore, the
injunctive relief requested by EMF is necessary to preserve the status quo pending a final
judgment or other disposition of this action and to restrain the City, vis-a-vis its agents, , assigns,
representatives, or any person who is participating or is in active concert with it, who receives
actual notice of the Courts order granting injunctive relief by personal service, telecopy, e-mail,
way that would tend to render a judgment in this action ineffectual or resulting in the lack of an
adequate remedy at law for EMF. EMF has invested millions of dollars in the Project, all of
which is currently at risk because of the Stop Work Order, and thus EMF believes this
substantial and committed investment precludes the need for an additional monetary bond.
67. As pleaded herein and demonstrated above, EMF has no adequate remedy at law,
and therefore also seeks a permanent injunction against the City as relief ordered from this Court.
68. EMF has further satisfied the requirements for the issuance of injunctive relief
through the affidavits of Bradley C. Miller and Don Jones supplied in support of this Original
Complaint and Application for Temporary Restraining Order, Preliminary Injunction, and
Permanent Injunction.
69. The Fifth Amendment to the United States Constitution, which has been applied
to the states through the Fourteenth Amendment, provides: nor shall private property be
taken for public use, without just compensation. U.S. CONST. amend. V; see also Sheffield
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Dev. Co. v. City of Glen Heights, 140 S.W.3d 660, 669 (Tex. 2004) ([T]he Takings Clause of
the Fifth Amendment [has been] made applicable to the states through the Fourteenth
Amendment.). Article I, Section 17 of the Texas Constitution provides that [n]o persons
property shall be taken, damaged or destroyed for or applied to public use without adequate
compensation being made, unless by the consent of such person. TEX. CONST. art. I, 17.
Wheeler v. Pleasant Grove, 644 F.2d 99, 100 (5th Cir. 1981). In Wheeler, the Fifth Circuit held
apartment complex constituted a taking. Id.; see also A.A. Profiles, Inc. v. Ft. Lauderdale,
71. EMF has established a substantial likelihood of success on the merits in this
matter by showing: (1) the Citys independently, prematurely, and non-judicially issued Stop
Work Order has deprived EMF of its rights to file post-judgment motions and/or an appeal
secured by supersedeas bond to maintain that status quo in the ongoing HOA Suit; (2) the Stop
Work Order has deprived EMFs Property of all economically beneficial use or value, and has
amounted to an unreasonable interference with EMFs use and enjoyment of the Property, in
violation of the Fifth and Fourteenth Amendments of the United States Constitution and Article
I, Section 17 of the Texas Constitution; and, (3) promissory estoppel is appropriate because EMF
reasonably and detrimentally relied in good faith on the Citys numerous representations and
permits issued over the course of roughly three years, yet the City sua sponte issued its Stop
Work Order when not required by court order or law, thereby damaging EMF irreparably.
72. To satisfy the irreparable harm prong of the preliminary injunction test, a
movant must show that irreparable injury is likely in the absence of an injunction. Elite Rodeo
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Assn, 159 F. Supp. 3d at 743 (citing Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 22
(2008)). In general, a harm is irreparable where there is no adequate remedy at law, such as
monetary damages. Elite Rodeo Assn, 159 F. Supp. 3d at 744 (citing Janvey, 647 F.3d at 600).
73. As demonstrated herein and above, the Citys wrongful acts have caused, and are
continuing to cause, irreparable harm and injury to EMF for which there is no adequate remedy
at law.
74. The Citys Stop Work Order poses just such an imminent and immediate threat
because it is currently preventing all work on the Project. Soon many workers will lose their
work and wages, which will force EMF to self-report the Stop Work Order to HUD and cause
additional violations under the terms of the parties Regulatory Agreement and risk HUD
declaring a material default thereof. All of these grave harms will befall EMF immediately if the
75. As noted herein and above, EMF has dedicated vast resources to planning,
coordinating, and scheduling construction of the Project. No less than 610 workers planning and
depending on employment on the Project will lose their work. It is entirely unclear what these
workers and their families will do should they lose their work on the Project. Further, once this
meticulously coordinated workforce disperses in desperate search of other work, it will likely be
impossible for EMF to reassemble the many workers. They will, in all probability, be lost to
EMF for good. Another significant irreparable harm EMF will suffer is the fact that it will
default on its HUD Loan and, perhaps even worse, consequently Encore may default on its
twelve HUD loans and be prevented from even applying for HUD or FHA loans in the future.
The insurance HUD and FHA provide for commercial loans is indispensable for EMF. If the
Stop Work Order remains in place, the very viability of Encore and all its many related entities,
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including EMF, will immediately be jeopardized. Moreover, EMF has already engaged in
substantial construction of the Project on its Property. As of now, there are partially completed
structures that are injuriously exposed to the elements and to potential theft and vandalism. If
the Stop Work Order remains in force, EMFs structures could be irreversibly damaged.
Furthermore, EMF risks the loss of negotiated and agreed-upon pricing for labor and materials
provided by subcontractors and vendors, particularly in the wake of the reconstruction efforts in
76. These many injuries to EMF cannot be readily calculated in monetary damages or
measured by any pecuniary standards. EMF has no adequate remedy at law for the injury that
the Citys Stop Work Order has caused and threatens to further cause. There is simply no legal
remedy that would give EMF complete, final, and equal relief. The damage that the Stop Work
Order has caused and continues to cause to EMFs operations, workers, and even Encores future
C. The threatened injury to EMF outweighs any threatened harm to the City.
77. Issuing the injunctive relief requested herein will substantially outweigh any
injury sustained by the City. Indeed, the City has already approved of EMFs construction on the
Project and issued the permits necessary therefor. It is entirely unlikely that the City would have
issued these permits in the first place if the City risked injury of any kind. Accordingly, EMF
has no reason to believe that the City will be harmed by the issuance of injunctive relief to EMF.
In fact, permitting the continuation of construction through the issuance of the injunctive relief
requested herein will actually serve the public interest by permitting EMF to continue
construction while the parties rights are exhausted on appeal in the State Court proceedings.
78. Conversely, and as demonstrated herein above, substantial and irreparable injury
will be sustained by EMF in the absence of the injunctive relief requested herein.
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79. Granting the preliminary injunction will maintain the status quo until the rights
and duties of the parties can be finally adjudicated and will pose no direct harm to the public.
80. Therefore, pursuant to Federal Rule of Civil Procedure 65, EMF asks this Court to
81. EMF has invested millions of dollars in the Project on its Property which is
currently at risk, and thus EMF believes this substantial and committed investment precludes the
need for an additional monetary bond. Nonetheless, EMF is willing to post a bond as security
for the issuance of a temporary restraining order and preliminary injunction should this Court so
request.
82. EMF requests that its Application for Temporary Restraining Order be granted as
follows and thereafter that its Application for Preliminary Injunction be set for hearing, and that
the City be notified of the date, time, and place of that hearing. Upon such hearing, EMF
requests the Court issue the preliminary injunctive relief requested herein and enjoin the
effectiveness of the Stop Work Order issued by the City of Dallas and attached hereto as Exhibit
1-C, and enjoin the City of Dallas and its agents, assigns, representatives, or any person who is
participating or is in active concert with it, who receives actual notice of the Courts order
granting injunctive relief by personal service, telecopy, e-mail, or otherwise from taking any
action as a result of, in furtherance of, or in reliance upon the Stop Work Order or preventing or
delaying EMF from developing or continuing construction upon the Project in any respect
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be commanded to appear and answer and that EMF have and recover the following from the City
of Dallas:
c. judgment for damages in a sum to compensate EMF for losses suffered as a result
of Defendants wrongful Stop Work Order and harm to EMF flowing from same;
e. costs of suit;
g. all other and further relief, in law or in equity, to which EMF may be entitled.
Respectfully submitted,
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CERTIFICATE OF SERVICE
I hereby certify that on October 30, 2017 a true and correct copy of the foregoing
document was served upon Defendant pursuant to the Federal Rules of Civil Procedure, as
follows:
Stacy Rodriguez
stacy.rodriguez@dallascityhall.com
Justin H. Roy
justin.roy@dallascityhall.com
Dallas City Attorneys Office
7DN Dallas City Hall
1500 Marilla Street
Dallas, TX 75200
Phone: 214-670-3519
Fax: 214-670-0622
Counsel for Defendant
RULE 65 CERTIFICATE
Pursuant to FED. R. CIV. P. 65(a)(1), I hereby certify that on October 30, 2017 Plaintiff
provided notice of its Application for Temporary Restraining Order to Defendant through
counsel, as follows:
Stacy Rodriguez
stacy.rodriguez@dallascityhall.com
Justin H. Roy
justin.roy@dallascityhall.com
Dallas City Attorneys Office
7DN Dallas City Hall
1500 Marilla Street
Dallas, TX 75200
Phone: 214-670-3519
Fax: 214-670-0622
Counsel for Defendant
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EXHIBIT 1
Case 3:17-cv-02995-L Document 1-1 Filed 10/30/17 Page 2 of 63 PageID 32
STATE OF TEXAS
COUNTY OF DALLAS
Before me, the undersigned authority, on this day personally appeared Bradley C. Miller,
known to me to be the person whose name is subscribed to this Affidavit, who, being by me duly
competent and authorized in all respects to execute this affidavit. I have personal knowledge of
the facts hereinafter stated, which are true and correct, and if called as a witness, would testify
competently thereto.
2. Since February 15, 2010, I have been the President of Encore Multi-Family, LLC
(Encore). Encore is the sole member of EMF Swiss Avenue GP, LLC, which is the general
partner of EMF Swiss Avenue, LP, the sole member of EMF. I have knowledge of EMFs
construction project (the Project) located at the property EMF owns at 4217 Swiss Avenue,
Case 3:17-cv-02995-L Document 1-1 Filed 10/30/17 Page 3 of 63 PageID 33
Dallas, Dallas County, Texas, 75204 (the Property). An illustrative rendering of what the
planned Project will look like once complete is attached hereto as Exhibit 1-A.
3. I have also reviewed the documents relating to the subject matter in the above-
captioned lawsuit. My testimony regarding the authenticity of exhibits attached to this Affidavit,
and incorporated herein, is based upon my personal review and knowledge of these documents.
4. EMF is a Delaware limited liability company and maintains its principal place of
5. EMF is the owner and developer of the Property. EMF is in the process of
constructing the Project, a five-story, 253-unit multifamily development on the Property. Prior
to beginning construction, EMF navigated the permitting process with the City, during which the
Project was subjected to the regular, rigorous scrutiny of the Citys permitting process.
6. The City of Dallas issued multiple permits to EMF connected to the Project on or
about November 21, 2016. As planned and allowed by the Permits, EMF began work on the
Project in reliance on the issuance of these permits and the Citys green light. To date, EMF
has invested more than $13.9 million in the Project. With every day that passes during pendency
of appeal, EMF will continue to invest hundreds of thousands, if not millions, of dollars in the
Project.
the issuance of the permits because the permits do not require EMF to conform to a City of
Dallas ordinance addressing residential proximity slopes (RPS) that allegedly emanate from
other distant, non-adjacent properties located in Dallas Planned Development District 298 (PD
2
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8. The Director of Sustainable Development and Construction for the City of Dallas
correctly concluded that no RPS applied to the Project or the Property and, thus, the permits
9. Petitioner appealed the issuance of the permits to the Board of Adjustment for the
City of Dallas (the Board). After hearing Petitioners appeal, with only a single dissenting
vote, the Board upheld the decision of the Director of Sustainable Development and Construction
with respect to the inapplicability of RPS. Petitioner then filed the above-captioned lawsuit
against the City of Dallas and the Board seeking a writ of certiorari and judicial review of the
Boards decision under section 211.011 of the Texas Local Government Code.
10. On September 11, 2017, this Court issued its Final Judgment, which granted
Petitioners motion for summary judgment and contemporaneously denied the City of Dallas and
the Boards motion for summary judgment. A true and correct copy of this Courts Final
11. The City of Dallas issued a stop work order (Stop Work Order) on September
14, 2017. A true and correct copy of the Stop Work Order is attached hereto as Exhibit 1-C.
the construction industry, I am familiar with the effect that a stop work order has on a major
construction project like that of the Property and the impact it is having on this Project.
Anything requiring that construction be halted mid-Project, poses a disastrous threat not only to
the Project, but also to EMFs business, its employees, employees families, and numerous of
EMFs stakeholders. If the City or any other body permanently halts EMFs development of the
Project, all of the money and time it has expended will become lost investments, with zero
return.
3
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13. Given its magnitude, the Project requires complex planning, advanced dedication
of resources, careful scheduling, the involvement of a large workforce consisting of many men
14. To secure financing for the Project, EMF obtained a loan insured under the United
States Department of Housing and Urban Development 221(d)(4) program (the HUD Loan).
By halting all construction on the Project as a result of any order, EMF is in violation of its
true and correct copy of which is attached hereto as Exhibit 1-D. The Regulatory Agreement
expressly states that HUD may declare a default (Declaration of Default) under this Agreement
if a violation occurs and is not corrected within 30 days of notice. Ex. 1-D 37(a). If HUD so
declares a default, as it likely will, HUD will notify the lender who is then permitted to declare
the whole Indebtedness due and payable and thereupon proceed with foreclosure of the Security
Instrument. Id. 37(b)(ii). HUD is even permitted under the Regulatory Agreement to
the construction industry, I am familiar with regulations and loans issued by the United States
Department of Housing and Urban Development (HUD) and with HUDs practices in various
scenarios of potential default and the repercussions that can follow. The ramifications of
incurring a violation, and ultimately a default, for all Encore entities and their hundreds of
employees, are catastrophic. Besides the devastating impact a default would have on the Project,
HUD will also issue a red flag on Encore, which immediately freezes the remittance of funds
for all other loans Encore entities have pending with HUD, and precludes Encore entities from
4
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participating in both current and future HUD and Federal Housing Administration (FHA)
insured loans.
16. Encore currently has twelve (12) major loans pending with HUD that may all be
jeopardized by the Stop Work Order. Encore has already drawn many millions of dollars and
committed many millions more in the form of down payments and land purchase expenditures on
a number of these loans. This is in addition to the vast sums Encore has spent on the due
diligence required for each of the HUD loans. The Regulatory Agreement expressly requires
that all relevant permits and licenses must be obtained before the HUD Loan closes, and EMF
expended considerable funds on not only properly obtaining the issued permits, but on hiring
third-party consultants to confirm that the permits have been obtained. See Ex. 1-D 7.
17. Further, Encore will not be able to apply for new HUD and FHA loans for the
indefinite future, thus depriving Encore of a vital and irreplaceable funding source. If all twelve
HUD-related projects are indeed halted, the consequences to Encoreincluding all of its
employees, vendors, and partnerswill be ruinous. In this scenario, bankruptcy for Encore-
related entities will be almost certain, and the production and delivery of much-needed housing
will collapse.
18. The domino effect flowing from abruptly halting the Project will have harsh and
irreparable effects on the many working men and women whose employment hinges on the
Project. It is my estimate that approximately 610 workers, employed by EMFs contractor and
sub-contractors, will lose employment. These are hourly workers who depend on the paychecks
they earn from their hard labor to support themselves and their families. These critical jobs and
their wages will disappear if the Stop Work Order remains in effect or the Final Judgment is
5
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19. Additionally, the Project will not be able to recover and easily resume
construction at a later date. Once the team of workers employed by EMF is dispersed, it will be
extremely difficultif not impossibleto reassemble them. It is entirely unclear how EMF will
replace all the many sub-contractors and workers whose hiring and organization had been
carefully coordinated far in advance. The workers will desperately go in search of other work to
support their families, as they should and must, and the meticulously assembled labor force will
be irretrievably lost.
enforcement also has a devastating impact on EMFs foreign investors and their ability to legally
enter the United States. EMF has substantial investors in the Project who are not United States
citizens, and who have undergone, or are presently undergoing, the arduous process of obtaining
visas through the EB-5 program administered by the United States Citizenship and Immigration
Services.1 Those investorsand those investors familieswho have already obtained visas
contingent on the Project would almost certainly lose them because the enterprise in which they
invested is no longer viable. Likewise, those investorsand those investors familieswho are
in the process of obtaining EB-5 visas would no longer be able to complete the application
process. In addition, the work stoppage could create a disruption in Encores Dallas EB-5
Regional Center and even have a rippling effect on Encores other Regional Centers across the
United States. The consequences for these men and women would be dismal. For instance,
besides losing their own immigration status, Encore may not be able to accommodate foreign
investors who would like to send their children to United States colleges. These potential
1
The EB-5 Program was enacted in 1990 to stimulate the U.S. economy through job creation and capital
investment by foreign investors. See www.uscis.gov/eb-5, last visited September 15, 2017.
6
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repercussions could cause great harm to Encore and many other innocent, hardworking people if
21. Another of the countless repercussions to the work stoppage is the fact that
significant, costly work has already been completed or partially completed on the Project. All of
the grading and underground utilities have been constructed or installed. In addition, concrete
grade beams have been completed, which support the parking structure that is also well under
construction. A photograph of the progress of the parking structure is attached hereto as Exhibit
1-E. The structures and fixtures that have been partially completed will be exposed to the
elements and to the potential theft of metal piping. Because the Stop Work Order came with no
preparation time, construction ceased mid-job and the site was not prepared for the work
cessation; even if work stops, the job site should be wound down and secured. The Stop Work
Order does not allow for the orderly wind-down of work as it prohibits any activity on the
Property.
22. Moreover, the construction loans supporting the Project will impose substantial
interest and penalties on EMF. EMF has already drawn millions of interest-bearing dollars on
the HUD Loan, and EMF has also received millions of dollars in separate private funding
currently bearing extremely costly compounding interest. Any delay caused by the Stop Work
Order will result in additional interest carry expense and considerable penalties. The Stop Work
Order constitutes a very severe compliance infraction with EMFs lenders that could ultimately
result in the default of EMFs loans and, as noted, preclude Encore from participating in future
HUD or FHA insured loans. If the judgment in this case is reversed on motion or on appeal,
EMF would have needlessly suffered colossal economic damages which EMF has already begun
7
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to incur and will continue to incur so long as the Stop Work Order is in effect or the Final
the company. In Encores approximately twenty years of existence, we have never lost an
investors investment. This sterling track record, made possible by the hard work of countless
good men and women, will be in jeopardy if the Stop Work Order stays in place or the Final
24. I believe that the City of Dallas would withdraw the Stop Work Order if the Final
25. I am not aware of any harm that will come to Petitioner by maintaining the status
quo and allowing the Project to continue while the Parties pursue their available legal remedies
and so that EMF can be heard by the Court. The Project is not complete and will still take many
months to complete.
26. In summary, grave harm will be suffered by EMF, Encore related entities, and
numerous innocent individuals if work is forced to cease on the Project pending appeal without
the Final Judgment being superseded. Besides the millions of dollars that will be needlessly lost,
the damage done to the persons and families rightfully depending on the employment provided
8
Case 3:17-cv-02995-L Document 1-1 Filed 10/30/17 Page 10 of 63 PageID 40
Bradley C. Miller
SUBSCRIBED AND SWORN TO before me, the undersigned authority, on this the 30
day of October, 2017, to certify which witness my hand and seal of office.
A
A
UVa)(X)
Notary Public in and r the State of Maine
Genie Ingraham
Notary Public State Of Maine
My Commission Expires Apri 24, 2020
9
Case 3:17-cv-02995-L Document 1-1 Filed 10/30/17 Page 11 of 63 PageID 41
EXHIBIT 1-A
1
EXHIBIT 1-B
Case 3:17-cv-02995-L Document 1-1 Filed 10/30/17 Page 14 of 63 PageID 44
FINAL JUDGMENT
Before the Court is Plaintiffs Motion for Summary Judgment and Defendants'
Motion for Summary Judgment. Having considered the Motions, the respective
responses and replies, the arguments of counsel, the pleadings and briefs, and the
Motion for Summary Judgment is Granted and the decision of the Dallas Board of
Denied.
This judgment disposes of all parties and issues and is a final, appealable
judgment.
ONORABLE i E TILL
PRESIDING JUDGE
FINAL JUDGMENT
1544292.1
Case 3:17-cv-02995-L Document 1-1 Filed 10/30/17 Page 15 of 63 PageID 45
EXHIBIT 1-C
Case 3:17-cv-02995-L Document 1-1 Filed 10/30/17 Page 16 of 63 PageID 46
ADDRESS:
City of Dallas
EXHIBIT 1-D
Case 3:17-cv-02995-L Document 1-1 Filed 10/30/17 Page 18 of 63 PageID 48
DOCUMENT CERTIFICATION
REGULATORY AGREEMENT
FOR MULTIFAMILY PROJECTS
By:
Roxanne Linscomb
Senior Commercial Escrow Officer
Case 3:17-cv-02995-L Document 1-1 Filed 10/30/17 Page 19 of 63 PageID 491
201600330337
ip 911litiilp11 1 OMB Approval No.2502-0598
14 AGREE 1/44 (Exp. 06/30/2017)
Public Reporting Burden for this collection of information is estimated to average .75 hours per response, including the time for
reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing
the collection of information. Response to this request for information is required in order to receive the benefits to be derived. This
agency may not collect this information, and you are not required to complete this form unless it displays a currently valid OMB
control number. While no assurance of confidentiality is pledged to respondents,. HUD generally discloses this data only in
response to a Freedom of Information Act request.
UNDER SECTIONS 207, 220, 221(d)(3), 221(d)(4), 223(a)(7), 223(f) and 231 OF THE
NATIONAL HOUSING ACT, AS AMENDED
This Agreement is entered into as of the 1st day of November, 2016, between
EMF SWISS AVENUE, LLC, a limited liability company organized and existing under
the laws of Delaware, whose address is 5005 LBJ Freeway, Suite 1200, Dallas, Texas
75244, its successors, heirs, and assigns (jointly and severally) (Borrower) and the
UNITED STATES DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT,
acting by and through the Secretary, his or her successors, assigns or designates
(HUD).
In consideration of, and in exchange for an action by HUD, HUD and Borrower agree
to the terms of this Agreement. The HUD action may be one of the following: HUD's
endorsement for insurance of the Note, HUD's consent to the transfer of the Mortgaged
Property, HUD's sale and conveyance of the Mortgaged Property, or HUD's consent to
other actions related to Borrower or to the Mortgaged Property.
Further, Borrower and HUD execute this Agreement in order to comply with the
requirements of the National Housing Act, as amended, and the regulations adopted by
HUD pursuant thereto. This Agreement shall continue during such period of time as
HUD shall be the owner, holder, or insurer of the Note. Upon satisfaction of such Note,
this Agreement shall automatically terminate. However, Borrower shall be responsible
for any Violations of this Agreement which occurred prior to termination.
Violation of this Agreement may subject Borrower and other signatories hereto to
adverse actions. Refer to Article VII below.
I. DEFINITIONS
1. DEFINITIONS. Any capitalized term or word used herein but not defined shall have
the meaning given to such term in the Security Instrument between Borrower and
Lender or the Note. The following terms, when used in this Agreement (including when
used in the above recitals), shall have the -Following meanings, whether capitalized or
not and whether singular or plural, unless, in the context, an incongruity results:
3
d. "Construction Contract" means the construction contract, approved by HUD,
between Borrower and the contractor contracting to perform construction or
substantial rehabilitation on the Project.
h. "Elderly Person" means any person, married or single, who is 62 years of age
or older.
4
holder of the Loan under the authority of the National Housing Act, as
amended, the Department of Housing and Urban Development Act, as amended,
or any other federal law or regulation pertaining to the Loan or the Mortgaged
Property.
n. "Indebtedness" means the principal, interest on, and all other amounts due at
any time under the Note or the Security Instrument, including prepayment
premiums, late charges, default interest, and advances to protect the security as
provided in the Security Instrument.
P. "Leases" means all present and future leases, subleases, licenses, concessions
or grants or other possessory interests now or hereafter in force, whether oral or
written, covering or affecting the Mortgaged Property, or any portion of the
Mortgaged Property (including but not limited to proprietary leases, non-
residential leases or occupancy agreements if Borrower is a cooperative housing
corporation), and all modifications, extensions or renewals. (Ground leases that
create a leasehold interest in the Land and where the Borrower's leasehold is
security for the Loan are not included in this definition.)
q. "Lender" means the entity identified as "Lender" in the first paragraph of the
Security Instrument, or any subsequent holder of the Note, and whenever the
term "Lender" is used herein, the same shall be deemed to include the Obligee,
or the Trustee(s) and the Beneficiary of the Security Instrument and shall also be
deemed to be the Mortgagee as defined by Program Obligations.
r. "Loan" means the loan initially made by Lender to Borrower, as defined in the
Security Instrument.
s. "Mortgaged Property" means all of Borrower's present and future right, title and
interest in and to all of the following whether now held or later acquired:
(5) all current and future rights, including air rights, development rights,
zoning rights and other similar rights or interests, easements, tenements,
rights-of-way, strips and gores of land, streets, alleys, roads, sewer rights,
waters, watercourses, and appurtenances related to or benefiting the Land
or the Improvements, or both, and all rights-of-way, streets, alleys and
roads that may have been or may in the future be vacated;
(6) all insurance policies covering the Mortgaged Property, and all proceeds
paid or to be paid by any insurer of the Land, the Improvements, the
Fixtures, the Personalty or any other part of the Mortgaged Property,
whether or not Borrower obtained such insurance policies pursuant to
Lender's requirement;
(7) all awards, payments and other compensation made or to be made by any
Governmental Authority with respect to the Land, the Improvements, the
Fixtures, the Personalty or any other part of the Mortgaged Property,
including any awards or settlements resulting from condemnation
proceedings or the total or partial taking of the Land, the Improvements,
the Fixtures, the Personalty or any other part of the Mortgaged Property
under the power of eminent domain or otherwise and including any
conveyance in lieu thereof;
(8) all contracts, options and other agreements for the sale of the Land, the
Improvements, the Fixtures, the Personalty or any other part of the
Mortgaged Property entered into by Borrower now or in the future,
including cash or securities deposited to secure performance by parties of
their obligations;
6
(10) all Rents and Leases;
(15) all names under or by which any of the above Mortgaged Property may be
operated or known, and all trademarks, trade names, and goodwill relating
to any of the Mortgaged Property;
(16) all deposits and/or escrows held by or on behalf of Lender under Collateral
Agreements; and
Notwithstanding items numbered (1) through (17) above, Borrower may hold non-
project funds in separate, segregated accounts, specifically labeled as non-project
funds, which are not part of the Mortgaged Property. These accounts may hold those
assets owned or received by Borrower, through equity contributions, gifts, or loan
proceeds that were not required by HUD to become part of the Mortgaged Property and
were not made a part of the Mortgaged Property by Borrower and funds released from
the Mortgaged Property in compliance with Program Obligations (such as Distributions
of Surplus Cash, if allowed).
7
v. "Personalty" means all equipment, inventory, and general intangibles. The
definition of "Personalty" includes furniture, furnishings, machinery, building
materials, appliances, goods, supplies, tools, books, records (whether in written or
electronic form), computer equipment (hardware and software) and other tangible or
electronically stored personal property (other than Fixtures) that are owned, leased
or used by Borrower now or in the future in connection with the ownership,
management or operation of the Land or the Improvements or are located on the
Land or in the Improvements, and any operating agreements relating to the Land or
the Improvements, and any surveys, plans and specifications and contracts for
architectural, engineering and construction services relating to the Land or the
Improvements, choses in action and all other intangible property and rights relating
to the operation of, or used in connection with, the Land or the Improvements,
including all certifications, approvals and governmental permits relating to any
activities on the Land. Intangibles shall also include all cash and cash escrow funds
related to the Project, such as but not limited to: Reserve for Replacement
accounts, bank accounts, Residual Receipt accounts, and investments.
y. "Program Obligations" means (1) all applicable statutes and any regulations
issued by the Secretary pursuant thereto that apply to the Project, including all
amendments to such statutes and regulations, as they become effective, except that
changes subject to notice and comment rulemaking shall become effective only
upon completion of the rulemaking process, and (2) all current requirements in HUD
handbooks and guides, notices, and mortgagee letters that apply to the Project, and
all future updates, changes and amendments thereto, as they become effective,
except that changes subject to notice and comment rulemaking shall become
effective only upon completion of the rulemaking process, and provided that such
future updates, changes and amendments shall be applicable to the Project only to
the extent that they interpret, clarify and implement terms in this Agreement rather
than add or delete provisions from such document. Handbooks, guides, notices,
and mortgagee letters are available on HUD's official website:
(http://www.hud.gov/offices/adm/hudclips/index.cfm or a successor location to that
site)
8
payments and deposits required under this Agreement, the Note, or the Security
Instrument), or as otherwise permitted by Program Obligations.
bb. "Rents" means all rents (whether from residential or non-residential space),
revenues, issues, profits (including carrying charges, maintenance fees, and other
cooperative revenues, and fees received from leasing space on the Mortgaged
Property), other income of the Land or the Improvements, gross receipts,
receivables, parking fees, laundry and vending machine income and fees and
charges for food and other services provided at the Mortgaged Property, whether
now due, past due, or to become due, Residual Receipts, and escrow accounts,
however and whenever funded and wherever held.
ee. "Surplus Cash" means certain Project cash pursuant to the calculation set
forth in Section 13.
ff. "State" includes the several states comprising the United States of America, and
Puerto Rico, the District of Columbia, Guam, the Commonwealth of the Northern
Marianas, American Samoa, and the U.S. Virgin Islands.
gg. "Taxes" means all taxes, assessments, vault rentals and other charges, if any,
general, special or otherwise, including all assessments for schools, public
betterments and general or local improvements, that are levied, assessed or
imposed by any public authority or quasi-public authority, and that, if not paid, could
become a lien on the Land or the Improvements.
jj. "Waste" means a failure to keep the Mortgaged Property in decent, safe and
sanitary condition and in good repair. During any period in which HUD insures the
Loan or holds a security interest on the Mortgaged Property, Waste is committed
when, without Lender's and HUD's express written consent, Borrower:
9
(1) physically changes the Mortgaged Property, whether negligently
or intentionally, in a manner that reduces its value;
(3) fails to pay before delinquency any Taxes secured by a lien having
priority over the Security Instrument;
(4) materially fails to comply with covenants in the Note, the Security
Instrument or this Regulatory Agreement respecting physical care,
maintenance, construction, abandonment, demolition, or insurance
against casualty of the Mortgaged Property; or
(5) retains possession of Rents to which Lender or its assigns have the
right of possession under the terms of the Loan Documents;
IL CONSTRUCTION; REFINANCING
10
coverage in the lender's title policy insuring the Security Instrument accepted by HUD
or that are not shown on the UCC search. All contractual obligations of Borrower or on
behalf of Borrower with any party shall be fully disclosed to HUD.
5. CONSTRUCTION COMMENCEMENT/REPAIRS.
b. [Check the box to the left for Refinance/Purchase transactions.] Borrower shall
complete any non-critical repairs in accordance with the terms of the Firm Commitment.
Borrower is in receipt of HUD's written acknowledgment of the satisfactory completion
of any non-critical repairs for the Mortgaged Property to the extent such non-critical
repairs have been completed. Borrower has provided funds to complete any remaining
repairs, as evidenced by the Escrow Agreement for Non-critical, Deferred Repairs, in
accordance with Program Obligations, if applicable.
11
7. REQUIRED PERMITS
I I b. [Check the box to the left for Refinancing/Acquisition transactions.] Borrower has
obtained, or cause to be obtained, all necessary certificates, permits, licenses,
qualifications, authorizations, consents and approvals from all necessary Governmental
Authorities to own and operate the Project, to carry out all of the transactions required
by the Loan Documents and to comply with all applicable federal statutes and
regulations of HUD in effect on the date of the Firm Commitment. If HUD requires that
Borrower execute an Escrow Agreement for Non-Critical, Deferred Repairs in
connection with HUD's endorsement for insurance of the Note, the licenses and permits
that are in effect as of the date hereof are sufficient to allow any repair of the
improvements required pursuant to the terms of the Escrow Agreement for Non-Critical,
Deferred Repairs to proceed to completion in the ordinary course.
8. ACCOUNTING REQUIREMENTS.
12
Building Loan Agreement and/or the Escrow Agreement for Non-Critical, Deferred
Repairs. Any funds remaining after completion of the repairs shall be treated in
accordance with Program Obligations, and pursuant to the Escrow Agreement for Non-
Critical Deferred Repairs, if applicable.
9. PAYMENTS. Borrower shall make promptly all payments due under the Note,
Security Instrument, and this Agreement.
a. The Reserve for Replacement shall be deposited with Lender or in a safe and
responsible depository designated by Lender in accordance with Program Obligations.
Such funds shall at all times remain under the control of Lender or Lender's designee
and shall be held in accounts insured or guaranteed by a federal agency and in
accordance with Program Obligations.
c. Borrower shall carry the balance in this account on the financial records as a
restricted asset. The Reserve for Replacement shall be invested in accordance with
Program Obligations, and any interest earned on the investment shall be deposited in
the Reserve for Replacement for use by the Project in accordance with this Section 10.
d. Disbursements from the Reserve for Replacement shall only be made after consent,
in writing, of HUD, in its sole discretion, or as otherwise approved by HUD pursuant to
Program Obligations. In the event of a Declaration of Default under the terms of the
Security Instrument, pursuant to which the Indebtedness has been accelerated, a
written notification by HUD to Borrower of a violation of this Agreement or at such other
times as determined solely by HUD, HUD may direct the application of the balance in
Previous editions are obsolete; Regulatory Agreement HUD-92466M (06/14)
Replaces form HUD-92466 (11/02)
Case 3:17-cv-02995-L Document 1-1 Filed 10/30/17 Page 31 of 63 PageID 61
13
such account to the amount due on the Indebtedness as accelerated or for such
other purposes as may be determined solely by HUD. '
e. In the case of a transfer of the Mortgaged Property where the Project is already
subject to a Security Instrument insured or held by HUD as of the date hereof, and this
Agreement is now being executed by Borrower as of the date hereof, the Reserve for
Replacement now to be established shall be equal to the amount due to be in such
account under this Agreement, and payments hereunder shall begin with the first
payment due on the Security Instrument after acquisition, unless some other method of
establishing and maintaining the account is approved in writing by HUD.
f. Upon Borrower's full satisfaction of all HUD obligations, including but not limited to
those imposed under this Agreement, Borrower shall receive any monies remaining in
the Reserve for Replacement.
a. Borrower shall deposit all Rents and other receipts of the Project in connection with
the financing of the Project, including equity or capital contributions required under the
Firm Commitment or otherwise advanced for the purpose and as part of the Mortgaged
Property, in the name of the Project in a federally insured depository or depositories and
in accordance with Program Obligations. (Such required equity or capital contributions
shall .not include certain syndication proceeds, such .as proceeds from Low Income
Housing Tax Credit transactions used to repay bridge loans, all as more fully set forth in
Program Obligations.) Such funds shall be withdrawn only in accordance with the
provisions of this Agreement for Reasonable Operating Expenses of the Project or for
Distribution of Surplus Cash or as reimbursement of advances as permitted by Sections
14 and 15 below; or for permitted deposits authorized by this Agreement or for any
other reason authorized under this Agreement. Any person or entity receiving
Mortgaged Property other than for payment of Reasonable Operating Expenses,
authorized Distributions of Surplus Cash, or for any reason authorized under Section 34
of this Agreement, shall immediately deliver such Mortgaged Property to the Project and
failing so to do shall hold such Mortgaged Property in trust.
b. Borrower shall not engage in any business or activity, including the operation of any
other project, or incur any liability or obligation not in connection with the Project, nor
acquire an Affiliate or contract to enter into any affiliation with any party except as
otherwise approved by HUD.
14
c. Borrower shall satisfy or obtain a release of any mechanic's lien, attachment,
judgment lien, or any other lien that attaches to the Mortgaged Property or any part
thereof.
d. Penalties, including but not limited to delinquent tax penalties and civil money
penalties, shall not be paid from the Project.
e. Borrower shall promptly notify HUD of the appointment of any receiver for the
Project, the filing of a petition in bankruptcy or insolvency or for reorganization.
f. Borrower shall keep the Mortgaged Property insured at all times in accordance with
the Security Instrument and Program' Obligations, and Borrower shall notify HUD of all
payments received from an insurer.
g. Borrower shall notify HUD of any action or proceeding relating to any condemnation
or other taking, or conveyance in lieu thereof, of all or any part of the Mortgaged
Property, whether direct or indirect condemnation.
h. Borrower shall notify HUD of any litigation proceeding filed against Borrower or the
Project, or any litigation proceeding filed by Borrower.
12.SECURITY DEPOSITS. Any funds collected as security deposits shall be kept (a)
separate and apart from all other funds of the Project; (b) in interest bearing trust
accounts, to the.extent required by State or local law; and (c) in an amount which shall
at all times equal or exceed the aggregate of all outstanding obligations under said
account. Security deposit account interest shall be paid on a pro rata basis to tenants
or applied to sums due under their leases upon the termination of their tenancy in the
Project. The use of tenant security deposits for Project operations is prohibited unless
the tenant has forfeited the deposit.
a. Borrower must calculate Surplus Cash as of the last day of its fiscal year.
Borrower may also, at its election, and if permitted pursuant to Program
Obligations, calculate Surplus Cash as of the last day of the sixth month of
its fiscal year. Borrower shall submit a report of its Surplus Cash
calculations to HUD with its required annual financial reports, pursuant to
Program Obligations.
(I) Project cash and cash equivalents (excluding the Reserve for
15
Replacement account and other HUD-required reserves);
(ii) short-term investments;
(iii) project-based Section 8 Housing Assistance Payments earned but
not yet received by Borrower; and
(iv) any amounts approved for withdrawal but not yet withdrawn from
the Reserve for Replacements or any other reserves or escrow
accounts;
after deducting:
(v) all sums due or required to be paid within the calendar month
following the date as of which Surplus Cash is calculated under the
terms of the Note and Security Instrument (including without
limitation principal, interest, mortgage insurance premium deposits,
deposits to the Reserve for Replacements and other reserves as
may be required by HUD, and tax and insurance escrow deposits);
(vi) all special funds required to be segregated by this Agreement, the
Note, the Security Instrument, or Program Obligations, including
tenant security deposits and any other amounts held in trust for
tenants; and
(vii) all other obligations of the Project payable within the next thirty
days, unless the obligation is paid subject to available Surplus
Cash or subject funds for payment of the obligation are set aside or
HUD has approved deferment of payment.
14. DISTRIBUTIONS. Borrower shall not make or take, or receive and retain, nor
allow any Affiliate or Principal to receive or retain any Distribution of assets or any
income of any kind of the Project, except from Surplus Cash or in accordance with
Program Obligations. Distributions are governed by the following conditions:
16
Borrower should have known about in the exercise of due care; (ii) notices of
physical repairs or deficiencies (including, but not limited to, building code
violations) by Governmental Authorities and/or by HUD have been issued and
remain unresolved to the satisfaction of the issuing public body; or (iii) Borrower
has been notified by HUD, Lender or a Governmental Authority that physical
repairs and/or deficiencies exist and Borrower has not corrected or cured the
identified items to HUD's satisfaction. Upon completion of the repairs, HUD may
permit a Distribution to be placed in an escrow account until a subsequent
inspection has been completed by HUD. If the Project passes a subsequent
inspection, HUD may then authorize release of the funds in the escrow account
to Borrower. HUD may also permit Distributions when there are minor or
contested local code violations on a case-by-case basis.
c. Any Distribution of any funds of the Project not permitted by this Agreement or
Program Obligations shall be returned to the appropriate Project account as
specified by HUD immediately.
d. Any Distributions shall be made or taken only as permitted by the law of the
applicable jurisdiction. Distributions, if taken, must be taken out of the
appropriate Project account as specified by HUD within the accounting period
immediately following the computation of Surplus Cash, and prior to the
Borrower's next calculation of Surplus Cash, pursuant to Section 13 above, and if
not taken within the identified period, these funds remain as Mortgaged Property
and may only be used as permitted by this Agreement.
a. "Borrower Advances" means any advance of funds or loan to the Project made
by Borrower or any Affiliate for whatever reason. Borrower Advances do not
include equity or capital contributions whether required in conjunction with the
financing of the Project or otherwise. Borrower Advances may only be repaid
from Project funds pursuant to this Section 15.
b. Any Borrower Advances must be deposited into the Project's operating account
as required by Program Obligations. Interest may accrue on Borrower Advances
pursuant to Program Obligations and may only be paid in accordance with this
Section 15.
17
c. Borrower Advances may only be repaid, and interest on Borrower Advances may
only be paid:
16.FINANCIAL ACCOUNTING. Borrower shall keep the books and accounts of the
operation of the Mortgaged Property in accordance with Program Obligations. The
books and accounts must be complete, accurate and current at all times. Posting
must be made at least monthly to the ledger accounts, and year-end adjusting
entries must be posted promptly in accordance with sound accounting principles.
Any Undocumented Expense or Distribution shall be an ineligible Project expense,
unless otherwise determined in writing by HUD. An "Undocumented Expense" is
an expense without sufficient documentation that provides reasonable identification
of the basis of the expense. Books, accounts and records shall be open and
available for inspection by HUD, after reasonable prior notice, during normal office
hours, at the Project or another mutually agreeable location.
18
agent and/or Affiliates, the books and records of the Project maintained by the
management agent and/or Affiliates shall remain with Borrower.
a. Within ninety (90) days, or such period established in writing by HUD, following
the end of each fiscal year, Borrower shall prepare a financial report for the
Borrower's fiscal year, or the portion thereof that started with the Borrower's
assumption of financial responsibility (or the portion thereof that ended with
Borrower's permitted transfer pursuant to a HUD-approved transfer of the
Project), based on an examination of the books and records of the Borrower in
accordance with generally accepted accounting principles (GAAP) and in such
other form and substance as specified by HUD in supplemental guidance, and
provide such report to HUD in such form and substance as specified by HUD
under the Uniform Financial Reporting Standards at 24 C.F.R. 5.801 (UFRS), or
any successor regulations, and Program Obligations.
d. If Borrower fails to perform as required pursuant to this Section 18, HUD may, at
its sole election, and in a manner determined by HUD, and without affecting any
Previous editions are obsolete; Regulatory Agreement HUD-92466M (06/14)
Replaces form HUD-92466 (11/02)
Case 3:17-cv-02995-L Document 1-1 Filed 10/30/17 Page 37 of 63 PageID 67
19
other provisions of this Agreement, and without first providing notice of
violation of this Agreement pursuant to Section 36 of this Agreement, initiate a
forensic audit of the Borrower's books, records, and accounts in such a manner
as to provide to HUD with as much of the same information that would have been
provided had the Borrower not failed to perform as required. Any such audit
initiated by HUD does not relieve Borrower of the requirement to submit to HUD
an annual audited financial report as required pursuant to this Agreement.
20
of this Section 21 pursuant to Program Obligations, in which case Borrower shall
immediately make arrangements for providing management satisfactory to HUD.
Borrower shall execute a management agreement or other document outlining
procedures for managing or operating the Mortgaged Property. Such agreement or
document must comply with Program Obligations. Borrower and management agent (if
applicable) shall submit and maintain a current management certification in accordance
with Program Obligations. In addition to the requirements of Section 17 above, all
management agreements must contain the following provisions:
a. HUD's rights and requirements prevail in the event of any conflict with the terms
of the management agreement.
b. The management agreement shall not be assigned without the prior written
approval of HUD.
(1) immediately without penalty if an Event of Default occurs under the Security
Instrument, Note, or Regulatory Agreement;
(2) upon thirty (30) days written notice to Borrower and management agent, for
failure to comply with the provisions of the Management Certification, or for
other good cause; or
(3) immediately without penalty when HUD takes control of the Mortgaged
Property pursuant to its rights under the loan documents as mortgagee in
possession.
f. Borrower may terminate the management agreement for cause with no more
than a thirty (30) day notice period.
g. The management agreement shall not exempt the management agent from
liability for damages, injuries or losses, resulting from the management agent's
gross negligence or willful misconduct.
21
25. RESIDENTIAL UNITS AND SERVICES. If the Project is subject to regulation of rent
by HUD, Borrower shall make residential units and services of the Project available to
eligible tenants at charges not exceeding those established in accordance with a rental
schedule approved in writing by HUD.
26. LEASE TERMS FOR RESIDENTIAL UNITS. Residential units shall not be rented for
a period of less than thirty (30) days or for more than 3 years and shall not be used for
Previous editions are obsolete; Regulatory Agreement HUD-92466M (06/14)
Replaces form HUD-92466 (11/02)
Case 3:17-cv-02995-L Document 1-1 Filed 10/30/17 Page 40 of 63 PageID 70
22
transient or hotel purposes. Rental for transient or hotel purposes shall mean: (a)
rental for a period of less than thirty (30) days or (b) any rental, if the occupants of the
residential units are provided customary hotel services such as room service for food
and beverages, maid service, furnishings or laundering of linens, and bellhop service.
Residential units in projects with Security Instruments initially endorsed for insurance
pursuant to Section 231 of the National Housing Act, as amended, may be rented for a
period of more than 3 years.
b. If the Security Instrument is originally endorsed for insurance under Section 221,
Borrower shall, in selecting tenants, give to Displaced Persons or Families an
absolute preference or priority of occupancy that shall be accomplished as
follows: (1) For a period of sixty (60) days from the date of original offering,
Previous editions are obsolete; Regulatory Agreement HUD-92466M (06/14)
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Case 3:17-cv-02995-L Document 1-1 Filed 10/30/17 Page 41 of 63 PageID 71
23
unless a shorter period of time is approved in writing by HUD, all units shall be
held for such preferred applicants, after which time any remaining unrented units
may be rented to non-preferred applicants; (2) thereafter, and on a continuing
basis, such preferred applicants shall be given preference over non-preferred
applicants in their placement on a waiting list to be maintained by Borrower; and
(3) through such further provisions agreed to in writing by the parties to this
Agreement.
c. At least 75% of the units in a Project insured under Section 231 shall be
designed for the use and occupancy of Elderly Persons unless prior written
approval is given by HUD for a lesser number of units.
d. All advertising or efforts to rent a project insured under Section 231 shall reflect a
bona fide effort of Borrower to obtain occupancy by Elderly Persons.
31.RENTS. If the Project is subject to regulation of rent by HUD, HUD will at any time
entertain a written request for a rent increase that is properly supported by
substantiating evidence and HUD will, within a reasonable time: (a) approve a rental
schedule that is necessary to compensate for any net increase, occurring since the last
approved rental schedule, in taxes (other than income taxes) and operating and
maintenance costs over which Borrower has no effective control; or (b) deny the
increase and state the reasons for its decision.
33. PROHIBITION OF CERTAIN FEES. Borrower shall not charge any Project tenant
or prospective Project tenant any fees prohibited under Program Obligations; such
prohibited fees may include an admission fee, a key fee, or similar payment pursuant to
any agreement to furnish residential units or services to persons making such
payments.
24
Borrower may charge certain application processing fees such as credit check or
criminal background fees or pet deposits.
b. Enter into any contract, agreement or arrangement to borrow funds or finance any
purchase or incur any liability, direct or contingent other than for Reasonable
Operating Expenses.
c. Pay out any funds of the Mortgaged Property except as provided in this Agreement
and Program Obligations.
f. Convey, assign or transfer any right to receive the Rents of the Mortgaged Property,
except as provided in the Security Instrument.
g. Remodel, add to, subtract from, construct, reconstruct or demolish any part of the
Mortgaged Property, except as required by HUD under Section 19(c) and except
that Borrower may, without the prior written approval of HUD, dispose of obsolete or
Previous editions are obsolete; Regulatory Agreement HUD-92466M (06/14)
Replaces form HUD-92466 (11/02)
Case 3:17-cv-02995-L Document 1-1 Filed 10/30/17 Page 43 of 63 PageID 73
25
deteriorated Fixtures or Personalty if the same are replaced with like items of the
same or greater quality or value and make minor alterations that do not impair the
security.
h. Permit the use of the Mortgaged Property for any other purpose except the use for
which it was originally intended, or permit commercial use greater than that originally
approved by HUD.
Reimburse any party from Mortgaged Property for payment of expenses or costs of the
Project or for any purpose except for Reasonable Operating Expenses and in a
manner consistent with Section 15.
k. Receive any fee or payment of any kind from any managing agent, employee of the
Project or of the managing agent, or other provider of Goods or Services of the Project,
except for warranty claims from providers of Goods and Services.
26
n. Materially change any unit configurations or change the number of units in the
Mortgaged Property.
VII. ENFORCEMENT
36. VIOLATION OF AGREEMENT. The occurrence of any one or more of the following
shall constitute a "Violation" under this Agreement:
a. Any failure by Borrower to comply with any of the provisions of this Agreement;
a. Upon a Violation, HUD may give written Notice, pursuant to Section 46, of the
Violation to Borrower, addressed to the addresses stated in this Agreement, or such
other addresses as may subsequently, upon appropriate written Notice to HUD, be
designated by Borrower as its legal business address. If, after receiving written Notice
of a Violation, that Violation is not corrected to the satisfaction of HUD either within thirty
(30) days after the date Notice is mailed, or within such shorter or longer time set forth
in said Notice, HUD may declare a default (Declaration of Default) under this Agreement
without further Notice. Alternatively, in order to protect the health and safety of the
tenants, HUD may declare a default at any time during the existence of a Violation
without providing prior written Notice of the Violation.
(i) If HUD holds the Note, declare the whole of said Indebtedness immediately due
and payable and then proceed with the foreclosure of the Security Instrument;
(ii) If said Note is not held by HUD, notify the holder of the Note of such default and
require the holder to declare a default under the Note and Security Instrument,
Previous editions are obsolete; Regulatory Agreement HUD-92466M (06/14)
Replaces form HUD-92466 (11/02)
Case 3:17-cv-02995-L Document 1-1 Filed 10/30/17 Page 45 of 63 PageID 75
27
and the holder, after receiving such Notice and demand, may declare the
whole Indebtedness due and payable and thereupon proceed with foreclosure of
the Security Instrument or assignment of the Note and Security Instrument to
HUD as provided in Program Obligations. Upon assignment of the Note and
Security Instrument to HUD, HUD may then proceed with the foreclosure of the
Security Instrument;
(iii) Collect all Rents and charges in connection with the operation of the Project and
use such collections to pay Borrower's obligations under this Agreement and
under the Note and Security Instrument and the necessary expenses of
preserving and operating the Mortgaged Property;
(v) Apply to any court, state or federal, for specific performance of this Agreement,
for an injunction against any Violations of this Agreement, for the appointment of
a receiver to take over and operate the Project in accordance with this terms of
the Agreement, or for such other relief as may be appropriate, as the injury to
HUD arising from a default under any of the terms of this Agreement would be
irreparable and the amount of damage would be difficult to ascertain; and,
28
VIII. MISCELLANEOUS
b. HUD shall be entitled to invoke any remedies available by law to redress any breach
or to compel compliance by Borrower with these requirements, including any remedies
available hereunder.
41. BINDING EFFECT. This Agreement shall bind, and the benefits shall inure to,
Borrower, its heirs, legal representative, executors, administrators, successors in office
or interest, and assigns, and to HUD and HUD's successors, so long as the Contract of
Insurance continues in effect, and during such further time as HUD shall be the Lender,
holder, coinsurer, or reinsurer of the Security Instrument, or obligated to reinsure the
Security Instrument.
42. PARAMOUNT RIGHTS AND OBLIGATIONS. Borrower warrants that it has not,
and shall not, execute any other agreement with provisions contradictory of, or in
opposition to, the provisions hereof, and that, in any event, the requirements of this
Agreement are paramount and controlling as to the rights and obligations set forth and
supersede any other requirements in conflict therewith.
43. SEVERABILITY. The invalidity of any clause, part, or provision of this Agreement
shall not affect the validity of the remaining portions hereof.
Previous editions are obsolete; Regulatory Agreement HUD-92466M (06/14)
Replaces form HUD-92466 (11/02)
Case 3:17-cv-02995-L Document 1-1 Filed 10/30/17 Page 47 of 63 PageID 77
29
44. RULES OF CONSTRUCTION. The captions and headings of the Sections of this
Regulatory Agreement are for convenience only and shall be disregarded in construing
this Regulatory Agreement. Any reference in this Regulatory Agreement to an
"Exhibit" or a "Section" shall, unless otherwise explicitly provided, be construed as
referring, respectively, to an Exhibit attached to this Regulatory Agreement or to a
Section of this Regulatory Agreement. All Exhibits attached to or referred to in this
Regulatory Agreement are incorporated by reference into this Regulatory Agreement.
Use of the singular in this Regulatory Agreement includes the plural and use of the
plural includes the singular. As used in this Regulatory Agreement, the term, "including"
means "including, but not limited to." In this Regulatory Agreement, where the context
may so require, feminine or masculine pronouns or adjectives shall be substituted for
those of the neuter gender, and vice versa.
46. NOTICE.
30
b. Any party to this Agreement and Lender may change the address to which
Notices intended for it are to be directed by means of Notice given to the other party in
accordance with this Section 46. Each party agrees that it shall not refuse or reject
delivery of any Notice given in accordance with this Section 46, that it shall
acknowledge, in writing, the receipt of any Notice upon request by the other party and
that any Notice rejected or refused by it shall be deemed for purposes of this Section 46
to have been received by the rejecting party on the date so refused or rejected, as
conclusively established by the records of the U.S. Postal Service or the courier service.
BORROWER:
EMF SWISS AVENUE, LLC
5005 LBJ Freeway, Suite 1200
Dallas, Texas 75244
Attention: Bradley C. Miller
HUD:
U.S Department of Housing and Urban Development
Fort Worth Regional Office
801 Cherry St., Unit #45, Suite 2500
Fort Worth, TX 76102
Attention: Office of Counsel
LENDER:
BERKADIA COMMERCIAL MORTGAGE LLC
323 Norristown Road, Suite 300
Ambler, Pennsylvania 19002
Attention: Vice President, Agency Servicing
47. CONFLICTS PROVISION. Borrower shall comply with the requirements set forth in
this Agreement as well as any other agreement Borrower enters into with
HUD. However, if a conflict exists between this Agreement and any other HUD
agreement executed by Borrower, the agreement which imposes the more restrictive
requirements on Borrower shall control.
31
48. THIRD PARTY BENEFICIARY. Borrower agrees that it is not a third-party
beneficiary to the Contract of Insurance between HUD and Lender, as more fully set
forth in 24 C.F.R. Part 207, Subpart B.
49. EXPLANATION OF ROLES. HUD is not providing a loan to the Borrower. HUD
operates insurance programs under the provisions of the National Housing. Act. HUD,
through the Federal Housing Administration (FHA) provides insurance to private and
public lenders which it has approved as financially responsible against loss on
mortgages financing multifamily projects. The mortgage insurance is a contract
between the approved lender and HUD. These are the only two parties to the FHA
insurance contract, the approved mortgage lender and HUD. The approved lender is
the only party that is intended to benefit from the contract of mortgage insurance. While
borrowers and other program participants may incidentally benefit in some manner from
the insured mortgage financing that the approved lender provides, all other program
participants are deemed not to be third party beneficiaries of the insurance contract.
Thus, program participants have no rights and should not have any expectations in
regard to decisions made or actions taken by HUD under the mortgage lender's contract
of mortgage insurance, including but not limited to accepting a loan as eligible for
insurance or paying a claim.
32
Warning
Any person who knowingly presents a false, fictitious, or fraudulent statement or claim in
a matter within the jurisdiction of the U.S. Department of Housing and Urban Development is
subject to criminal penalties, civil liability, and administrative sanctions.
IN WITNESS WHEREOF, the parties hereto have set their hands and seals on the date
first herein above written.
Each signatory below hereby certifies that each of their statements and representations
contained in this Agreement and all their supporting documentation thereto are true,
accurate, and complete and that each signatory has read and understands the terms of
this Agreement. This Agreement has been made, presented, and delivered for the
purpose of influencing an official action of HUD in insuring the Loan, and may be relied
upon by HUD as a true statement of the facts contained therein.
33
BORROWER:
By:
Bradley C. Miller
Authorized Signat
STATE OF TEXAS
] ss:
COUNTY OF DALLAS
BEFORE ME, the undersigned, a Notary Public in and for said County and State,
on this day personally appeared Bradley C. Miller, known to me to be the Authorized
Signatory of ENCORE MULTI-FAMILY, LLC, a Delaware limited liability company and
the Sole Member of EMF SWISS AVENUE GP, LLC, a Delaware limited liability
company and the General Partner of EMF SWISS AVENUE, LP, a Delaware limited
partnership and Sole Member of EMF SWISS AVENUE, LLC, a Delaware limited
liability company, that executed the foregoing instrument, and acknowledged to me that
such executed the same for the purposes and consideration therein expressed.
[SEAL}
TERRI SMITH
Texas
0,
? "!-A Notary Public, State of
Expires 03-29-2018 Notary Public, State of Texas
Pc Comm.
,,,,,,,,,,,, Notary ID 128221592
Previous editions are obsolete; Regulatory Agreement HUD-92466M (06/14)
Replaces form HUD-92466 (11/02)
Case 3:17-cv-02995-L Document 1-1 Filed 10/30/17 Page 52 of 63 PageID 82
34
By:
STATE OF TEXAS
ss:
COUNTY OF TARRANT
35
EXHIBIT A
[DESCRIPTION OF THE LAND]
Tract 1:
Being a tract of land located in the City of Dallas, Dallas County, Texas, a portion of the John
Grigsby Survey, Abstract No. 495, a portion of Lot 1A, Block 10/740, SWISS AVENUE BANK-
LIVE OAK ADDITION, an addition to the City of Dallas, Dallas County, Texas, according to the
plat thereof recorded in Volume 96068, Page 2790, Deed Records, Dallas County, Texas, being
all of that called 2.5361 acres tract of land, as described by deed to Borderplex Swiss Avenue,
LLC, as recorded by Instrument No. 201500331119, Official Public Records, Dallas County,
Texas, and being more particularly described as follows:
BEGINNING at a 3" aluminum monument found in the southeast right-of-way line of Live Oak
Street (an 80' public right-of-way) for the west corner of Lot 1C, Block 10/740, BANK OF TEXAS
SWISS AVENUE, PHASE 1, an addition to the City of Dallas, Dallas County, Texas, according
to the plat thereof recorded by Instrument No. 201600072450, Official Public Records, Dallas
County, Texas;
THENCE, departing said southeast right-of-way line and with the southwest line of said Lot 1C,
South 45 degrees 02 minutes 58 seconds East, a distance of 199.26 feet to a 3" aluminum
monument found for the south corner of said Lot 1C;
THENCE, along the southeast line of said Lot 1C, North 45 degrees 06 minutes 00 seconds
East, a distance of 124.48 feet to 3" aluminum monument found in the southwest right-of-way
line of Peak Street (a variable width public right-of-way) for the east corner of said Lot 1C;
South 44 degrees 54 minutes 00 seconds East, a distance of 22.98 feet to a 5/8 inch iron rod
with red plastic cap stamped "SCI" set;
South 44 degrees 48 minutes 52 seconds West, a distance of 2.00 feet to a 5/8 inch iron rod
with red plastic cap stamped "SCI" set;
South 44 degrees 54 minutes 00 seconds East, a distance of 417.23 feet to a 3/4 inch iron rod
found at the northerly end of a right-of-way corner-clip;
THENCE, along said corner-clip, South 00 degrees 04 minutes 36 seconds East, a distance of
14.19 feet to a 3/4 inch iron rod found in the northwest right-of-way line of Swiss Avenue (an 80'
public right-of-way);
THENCE, along said northwest right-of-way line, South 44 degrees 44 minutes 49 seconds
West, a distance of 217.73 feet to a 5/8 inch iron rod found for the south corner of said 2.5361
acre tract, same being the west corner of that called 1.36 acre tract of land, as described by
36
deed to 4125 Swiss LLC, as recorded by Instrument No. 201500124008, Official Public
Records, Dallas County, Texas;
THENCE, along the northeast line of said 1.36 acre tract, North 44 degrees 58 minutes 31
seconds West, passing at a distance of 300.00 feet the north corner of said 1.36 acre tract and
the east corner of Lot 3, Block 10/740, HASKOAK, an addition to the City of Dallas, Dallas
County, Texas, according to the plat thereof recorded by Instrument No. 200900020194, Official
Public Records, Dallas County, Texas, continuing for a total distance of 377.06 feet to a 5/8 inch
iron rod found in the northeast line of said Lot 3;
South 43 degrees 40 minutes 31 seconds West, a distance of 3.37 feet to a 5/8 inch iron rod
with red plastic cap stamped "SCI" set;
North 44 degrees 50 minutes 28 seconds West, a distance of 80.26 feet to a fence corner post
found for the south corner of that tract of land, called Tract 10, as described by deed to L.B.
Billingsly Investment Co., as recorded in Volume 93014, Page 1850, Deed Records, Dallas
County, Texas;
THENCE, along the southeast line of said Billingsly tract, North 44 degrees 37 minutes 36
seconds East, a distance of 74.03 feet to a 1/2 inch iron rod found for the east corner of said
Billingsly tract and an inside ell corner of said 2.5361 acres tract;
THENCE, along the northeast line of said Billingsly tract and the southwest line of said 2.5361
acres tract, North 45 degrees 02 minutes 58 seconds West, a distance of 192.78 feet to 5/8 inch
iron rod found in the southeast right-of-way line of said Live Oak Street;
THENCE, along said southeast right-of-way line, North 44 degrees 40 minutes 06 seconds
East, a distance of 35.00 feet to the POINT OF BEGINNING, and containing 110,474 square
feet or 2.5361 acres of land, more or less.
NOTE: COMPANY DOES NOT REPRESENT THAT THE ABOVE ACREAGE AND/OR
SQUARE FOOTAGE CALCULATIONS ARE CORRECT.
Tract 2: (EASEMENT)
37
Access Easement executed by BOKF, National Association d/b/a Bank of Texas to Borderplex
Swiss Avenue, LLC, filed December 16, 2015, recorded under Clerk's File No. 201500331121,
Official Public Records, Dallas County, Texas.
Tract 3: (EASEMENT)
Mutual Access Easement Agreement executed by BOKF, National Association d/b/a Bank of
Texas and Borderplex Swiss Avenue, LLC, filed December 16, 2015, recorded under Clerk's
File No. 201500331120, Real Property Records, Dallas County, Texas.
38
SECTION 50 ADDENDUM
1. Bradley C. Miller
do not assume personal liability for payments due under the Note and Security
Instrument, or for the payments to the Reserve for Replacements, or for matters not
under its control, provided that each Section 50 Party shall be personally liable under
this Agreement only with respect to the matters hereinafter stated; namely: (a) for funds
or property of the Project coming into its hands which, by the provisions hereof, it is not
entitled to retain; (b) for authorizing the conveyance, assignment, transfer, pledge,
encumbrance, or other disposition of the Mortgaged Property or any interest therein in
violation of Section 35(a) of the Regulatory Agreement to which this addendum is
attached ("Regulatory Agreement") without the prior written approval of HUD; and (c)
for its own acts and deeds, or acts and deeds of others, which it has authorized in
violation of the provisions of this Section 50 Addendum. The obligations of each
Section 50 Party shall survive any foreclosure proceeding, any foreclosure sale, any
delivery of any deed in lieu of foreclosure, any termination of the Regulatory
Agreement, or any release of record of the Security Instrument.
39
Bradley C. Mill%
STATE OF TEXAS
] ss:
COUNTY OF DALLAS
BEFORE ME, the undersigned, a Notary Public in and for said County and State,
on this day personally appeared Bradley C. Miller, known to me to be the individual that
executed the foregoing instrument, and acknowledged to me that he executed the same
for the purposes and consideration therein expressed.
Given under my hand seal of office this ct. day of November, 2016.
[SEAL]
This Rider ("Rider") is attached to and amends the Regulatory Agreement entered into between
EMF SWISS AVENUE, LLC, a Delaware limited liability company, and HUD, dated as of
November 1, 2016 ("Regulatory Agreement") concerning a Project known as "Encore Swiss
Avenue Apartments" located at:
To the extent that any provisions of the Rider conflict with any provisions of the Regulatory
Agreement, the provisions of this Rider shall prevail. Any terms in the Regulatory Agreement
not in conflict with this Rider remain in full force and effect.
Notwithstanding anything else in the Regulatory Agreement to which this Rider is attached:
1. Definitions
The following terms shall be added to Section 1 (Definitions) of the Regulatory Agreement
(a) Any capitalized terms not defined in this Rider shall have the meaning given in the
Regulatory Agreement.
(b) "Green Standard" means an industry recognized standard of building design,
construction, renovation and/or maintenance that results in minimized consumption
of non-renewable energy sources and optimum use of sustainable materials,
resources and methods and is acceptable to HUD.
(c) "Portfolio Manager" means the free software tool provided by the US
Environmental Protection Agency (EPA) for the purpose of reporting and scoring
utility consumption for common types of facilities in the built environment including
multifamily properties, and any successor or amended tool as EPA may from time to
time provide.
(d) "Statement of Energy Performance (SEP)" means a particular report produced by
Portfolio Manager available in various formats providing utility consumption data for
12 month periods with stabilized operations and comparing the energy consumption
per square foot of a subject property to a fixed sample of similar properties by means
of an index score, and any successor or amended report providing an index score
for multifamily properties.
(e) "ENERGY STAR Score" means the 1 to 100 index score produced by Portfolio
Manager and reported on the SEP comparing the energy performance of the subject
property to a sample of other similar properties.
(f) "HUD Custom SEP" is a machine readable format of the SEP which may be a
required format for an SEP when HUD enables electronic or automated reporting.
(g) "Qualified Energy Professional" is a person or firm qualified by education and
experience as described in the Multifamily Accelerated Processing Guide, Chapter 5,
or amended Program Obligations.
Borrower has elected and HUD has agreed to reduce the mortgage insurance premium (MIP)
due from the Lender on the Loan in consideration of Borrower's achievement of a recognized
green building standard in accordance with HUD Notice published in Federal Register Nol. 81,
No. 62 /Thursday, March 31, 2016 and entitled "Changes in Certain Multifamily Mortgage
Insurance Premiums and Regulatory Waiver for the 542(c) Risk-Sharing Program" [Docket No.
FR-5876N-03].
X Choose One:
Enterprise Green Communities Criteria
U.S. Green Building Council's LEED-H
U.S. Green Building Council's LEED-H Midrise
U.S. Green Building Council's LEED-NC
LEED for Existing Buildings: Operations & Maintenance
ENERGY STAR Certification
EarthCraft House
EarthCraft Multifamily
Earth Advantage New Homes
Greenpoint Rated New Home
Greenpoint Rated Existing Home (Whole House or Whole Building label)
X National Green Building Standard (NGBS)
Passive Building Certification or EnerPHit Retrofits certification from the Passive House
Institute US (PHIUS), International Passive House Association, or the Passive House
Institute
Living Building Challenge Certification from the International Living Future Institute
Other (Specify):
Each Green Standard establishes milestones and/or performance levels to be met and
procedures to evidence successful completion or achievement of the milestones or levels of
performance. When all requirements are met the Borrower must provide the Lender and the
Lender must provide HUD with the evidence of achievement as defined by the selected Green
Standard. When achievement is contingent on completion of construction, repairs or
alterations, then evidence, as defined by the Green Standard, that the completion of work is
consistent with the Green Standard must be provided within three months of the completion of
work.
After, and in addition to, meeting the selected Green Standard, a minimum score of 75 or better
on the 1-100 ENERGY STAR score, using a Statement of Energy Performance from EPA's
Portfolio Manager, is required and must be verified by the independent conclusion of a
Qualified Energy Professional. When achievement of the Green Standard is contingent on
completion of construction, the time when the SEP must be delivered varies as follows:
(a) For new construction or substantial rehabilitation projects, the required ENERGY
STAR score Must be provided to HUD not later than 15 months following the
achievement of sustaining occupancy.
(b) For projects acquired or refinanced under Section 223 of the National Housing Act
with repairs and alterations, the required ENERGY STAR score must be provided
to HUD not later than 15 months following completion of the repairs and alterations.
After meeting the requirements of Section 3 above, evidencing the achievement of the selected
green standard, the owner must 'annually evidence continuing energy performance by
submitting to HUD a Statement of Energy Performance (SEP), prepared or verified by a
Qualified Energy Professional and showing a score of 75 or better. If and when HUD enables
submission of machine readable SEPs then the HUD Custom SEP shall be provided. If and
when the utility provider(s) for the Project deliver whole building utility consumption data directly
to Portfolio Manager by means of automatic electronic data transfer protocols, then the
resulting SEP for the Project does not require verification by a Qualified Energy Professional.
Projects of less than 20 units are exempt from requirements to provide an SEP and to evidence
an ENERGY STAR Score of 75 or more.
BORROWER
EMF SWISS AVENUE, LLC,
a Delaware limited liability company
By:
Bradley C. M
Authorized Sig tory
STATE OF TEXAS
] ss:
COUNTY OF DALLAS
BEFORE ME, the undersigned, a Notary Public in and for said County and State,
on this day personally appeared Bradley C. Miller, known to me to be the Authorized
Signatory of ENCORE MULTI-FAMILY, LLC, a Delaware limited liability company and
the Sole Member of EMF SWISS AVENUE GP, LLC, a Delaware limited liability
company and the General Partner of EMF SWISS AVENUE, LP, a Delaware limited
partnership and Sole Member of EMF SWISS AVENUE, LLC, a Delaware limited
liability company, that executed the foregoing instrument, and acknowledged to me that
such executed the same for the purposes and consideration therein expressed.
[SEAL]
EXHIBIT 1-E
Case 3:17-cv-02995-L Document 1-1 Filed 10/30/17 Page 63 of 63 PageID 93
Case 3:17-cv-02995-L Document 1-2 Filed 10/30/17 Page 1 of 10 PageID 94
EXHIBIT 2
Case 3:17-cv-02995-L Document 1-2 Filed 10/30/17 Page 2 of 10 PageID 95
Case 3:17-cv-02995-L Document 1-2 Filed 10/30/17 Page 3 of 10 PageID 96
Case 3:17-cv-02995-L Document 1-2 Filed 10/30/17 Page 4 of 10 PageID 97
Case 3:17-cv-02995-L Document 1-2 Filed 10/30/17 Page 5 of 10 PageID 98
Case 3:17-cv-02995-L Document 1-2 Filed 10/30/17 Page 6 of 10 PageID 99
Case 3:17-cv-02995-L Document 1-2 Filed 10/30/17 Page 7 of 10 PageID 100
EXHIBIT 2-A
1
EXHIBIT 2-B
Case 3:17-cv-02995-L Document 1-2 Filed 10/30/17 Page 10 of 10 PageID 103
ADDRESS:
City of Dallas
EXHIBIT 4
Case 3:17-cv-02995-L Document 1-3 Filed 10/30/17 Page 2 of 2 PageID 105
ORDER ON INTERVENOR'S
EMERGENCY MOTION TO STAY ENFORCEMENT OF FINAL JUDGMENT
The Court has considered Intervenor's Emerge cy Motion to Stay Enforcement of Final
arguments and competent evidence admitted in connection with the motion and has concluded
Pagc solo
Case 3:17-cv-02995-L Document 1-4 Filed 10/30/17 Page 1 of 9 PageID 106
EXHIBIT 3
FILED
DALLAS COUNTY
2-CITS ES 3/3/2017 11:16:18 AM
Case 3:17-cv-02995-L Document 1-4 Filed 10/30/17 Page 2 of 9 PageID 107 FELICIA PITRE
DISTRICT CLERK
Tonya Pointer
DC-17-02532
Cause No. DC-17-_ _ _ _ __
COMES NOW, Plaintiff and file this Original Petition and Petition for Writ of
Adjustment of the City of Dallas, Texas (collectively "Defendants") and for cause of
1.
PARTIES
Association is located in Old East Dallas and represents approximately Boo properties
existing under the laws of the State of Texas. THE CITY OF DALLAS may be
served by serving its MAYOR. MIKE RAWLINGS. DALLAS CITY HALL. 1500
created under the laws of the State of Texas. THE BOARD OF ADJUSTMENT
may be served through its SECRETARY, TRENA LAW, DALLAS CITY HALL,
2.
JURISDICTION
2.1. This Court has subject matter jurisdiction because this action is an appeal
and a petition for writ of certiorari pursuant to Texas Local Government Code
211.ou(a).
2.2. Venue is proper in Dallas County, Texas because the cause of action
occurred in Dallas County and the cause of action involves land located in Dallas
County.
3.
DISCOVERY CONTROL
PLAN
190 of the Texas Rules of Civil Procedure. Pursuant to Texas Rule of Civil
4.
FACTS
4.1. This appeal relates to a challenge brought by Peak's Addition Home Owner's
of the city building official that a proximity slope would not be applied to property
located at 4217 Swiss Avenue in Dallas, Texas, which is located within the boundaries of
the Peak's Addition Home Owner's Association and located within Dallas Planned
4.2. On or about April 22, 2016, members of the Peak's Addition Home Owner's
Association met with Dallas City Councilman Adam Medrano and a City of Dallas
Assistant Building Official regarding construction that was planned for 4217 Swiss
Building Official advised those present that a residential proximity slope applied to the
planned construction site such that the maximum height of the proposed structure
City of Dallas Director of Sustainable Development and Construction, after talking with
earlier decision of the building official and concluded that no residential proximity
slope applied to the planned construction site such that the height of the proposed
4-4 On or about November 21, 2016, the City of Dallas issued multiple permits
Avenue in Dallas Texas. The Dallas Development Code, Section 51A-4. 703(a)(2) allows
when that decision concerns issues within the jurisdiction of the board. See also TEX.
Loe. Gov'T CODE 21i.01o(a)(1). Peak's Addition Home Owner's Association timely
filed an appeal to the Dallas Board of Adjustment from the issuance of these permits
because the permits did not require the applicant to conform to residential proximity
4.5. The Dallas Development Code gives the Dallas Board of Adjustment the
power to hear and decide appeals from decisions of administrative officials made in the
enforcement of the zoning ordinances of the city, and to interpret the intent of the
zoning district map when uncertainty exists because the actual physical features differ
from those indicated on the zoning district map and when the rules set forth in the
zoning district boundary regulations do not apply. Dallas Dev. Code 51A-3.102(d);
See also TEX. Loe. Gov'TCODE 211.009(a)(1). Pursuant to Section 51A-3.102(d), Panel
A of the Dallas Board of Adjustment heard the appeal of Peak's Addition Home Owner's
the board has the same authority as an administrative official and it may reverse or
determination from which an appeal is taken and make the correct decision or
determination. TEX. Loe. Gov'T CODE 21i.009(b). In its review of the administrative
official's decision, the Board of Adjustment voted to uphold the decision of the Director
promote compliance with the intent of the subject ordinance. In its review of an
administrative official's decision, the Board is required to make "the correct" decision
4. 7. Texas Local Government Code Section 211.011 allows any person aggrieved
Peak's Addition Home Owner's Association is aggrieved and does hereby appeal and
asserts that the decision of the Board of Adjustment is illegal in that it renders an
incorrect interpretation and application of the residential proximity slope. The Board
particular and without limitation, the Board reached the astounding conclusion that a
city-wide residential proximity slope, i.e., Dallas Development Code 51.A-4.412, does
not apply and project upward and outward "from every site of origination" to an
infinite extent. Plaintiff submits that the Board's conclusion was erroneous and illegal
in part and in whole. Plaintiff requests that this Court reverse the decision of the Board
of Adjustment and render judgment that the 3-to-1 proximity slope found in Dallas
Development Code Section sIA-4-412 applies and projects upward and outward from
subtract 9 of PD 298 and to an infinite extent such that it extends into subtract 10 of
PD 298.
5.
WRIT OF CERTIORARI
5.1. Plaintiff realleges and incorporates paragraphs 1.1 through 4.8 above
5.2. Pursuant to 211.011 of the Texas Local Government Code, Plaintiff filed
a petition for writ of certiorari in order to appeal the Board ofAdjustment's decision
of Feb r u a r y 2 1, 2 o 17.
6.
DUE PROCESS
6.1. Plaintiff realleges and incorporates paragraphs 1.1 through 5.3 above as
6.2. The City's and the Board of Adjustment's unfettered, arbitrary, capricious
and unreasonable actions and decisions violate the due process clause of the Texas
Constitution, Article I, Section 19. The portions of the Dallas Development Code and
PD 298 pertinent to this case have clear and attainable standards that the BOA
ignored and violated. As such, Plaintiff has not been afforded due process under the
Texas Constitution.
a writ of certiorari to issue herein to the BOA of the City of Dallas, Texas and the
City of Dallas, Texas; that such writ order a review of the decision of the Board of
Adjustment and prescribe the time within which return must be made and service
upon the undersigned attorneys; that such writ direct the Board of Adjustment to
return certified or sworn copies of all the original papers acted upon by it in reaching
its decision, together with transcripts of the testimony and proceedings received at
the February 21, 2017 hearing; that upon hearing, the Court enter judgment
reversing the Board of Adjustment and declaring its decision void; and grant Plaintiff
such other and further relief at law or in equity to which it may show itself justly
entitled.
:~p~lysubmi7Y ~
R.Mic~
State Bar No. 15103250
"
VERIFICATION
State of Texas
County of Dallas
BEFORE ME, the undersigned notary public, on this day personally appeared Jim
Anderson, and upon his oath stated that he has read the foregoing petition and that he has
personal knowledge of the facts stated, and that the facts stated therein are true and correct.
EXHIBIT 5
Case 3:17-cv-02995-L Document 1-5 Filed 10/30/17 Page 2 of 2 PageID 116
CAUSE NO. DC-17-02532
PEAK'S ADDITION
IN THE DISTRICT COURT
HOME OWNER'S ASSOCIATION,
Plaintiff,
Security Under TRAP 24.2(a)(3), the response of the Plaintiff thereto, and the arguments of
counsel in connection with the Motion and has concluded that the Motion should be DENIED.
Page solo
Case 3:17-cv-02995-L Document 1-6 Filed 10/30/17 Page 1 of 23 PageID 117
EXHIBIT 6
1
Case 3:17-cv-02995-L Document 1-6Motion HearingPage 2 of 23 PageID 118
Filed 10/30/17
September 18, 2017
1 REPORTER'S RECORD
VOLUME 1 OF 1 VOLUMES
2 TRIAL COURT CAUSE NO. DC-17-02532
3 PEAK'S ADDITION HOMEOWNER'S ) IN THE DISTRICT COURT
ASSOCIATION )
4 )
Plaintiff(s), )
5 )
vs. ) DALLAS COUNTY, TEXAS
6 )
CITY OF DALLAS and BOARD OF )
7 ADJUSTMENT FOR THE CITY OF )
DALLAS )
8 )
Defendant(s). ) 134TH JUDICIAL DISTRICT
9
10
11 _____________________________________________
12 INTERVENORS EMERGENCY MOTION TO STAY ENFORCEMENT OF
SEPTEMBER 11, 2017 FINAL JUDGMENT HEARING
13 _____________________________________________
14
15
16 On the 18th day of September, 2017, the following
17 proceedings came on to be held in the above-titled and
18 numbered cause before the Honorable Dale B. Tillery,
19 Judge Presiding, held in Dallas, Dallas County, Texas.
20 Proceedings reported by computerized stenotype
21 machine.
22
23
24
25
1 APPEARANCES
2 R. Michael Northrup
SBOT NO. 15103250
3 Cowles & Thompson, P.C.
901 Main Street
4 Suite 3900
Dallas, TX 75202
5 Telephone: 214-672-2000
Fax: 214-672-2020
6 E-mail: Mnorthrup@cowlesthompson.com
Counsel for PLAINTIFF
PLAINTIF
7
JUSTIN H. ROY
8 SBOT NO. 24013428
STACY JORDAN RODRIGUEZ
9 SBOT NO. 11016750
Dallas City Attorneys Office
10 7DN Dallas City Hall
1500 Marilla Street
11 Dallas, TX 75200
Telephone: (214) 670-3519
12 Fax: (214) 670-0622
E-mail: Justin.roy@dallascityhall.com
13 stacy.rodriguez@dallascityhall.com
Counsel for DEFENDANTS
14
CHRISTOPHER D. KRATOVIL
15 SBOT NO. 24027427
ALISON R. ASHMORE
16 SBOT NO. 24059400
Dykema Cox Smith
17 1717 Main Street, Suite 4200
Dallas, Texas 75201
18 Telephone: (214) 462-6400
Fax: (214) 462-6401
19 E-mail: Ckratovil@dykema.com
aashmore@dykema.com
20 Counsel for FOR INTERVENOR EMF SWISS AVENUE, LLC
21
22
23
24
25
1 VOLUME 1
2 INTERVENORS EMERGENCY MOTION TO STAY ENFORCEMENT OF
3 SEPTEMBER 11, 2017 FINAL JUDGMENT HEARING
4 September 18, 2017
5 PAGE VOL.
6 Proceedings .......................................4 1
7 Adjournment .....................................21 1
8 Reporter's Certificate ...........................22 1
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
1 P R O C E E D I N G S
2 THE COURT: All right. We're on the
3 record Cause No. DC-17-02532 Peaks Addition Homeowners
4 Association vs. City of Dallas, et al. Announcements and
5 appearance on the record for the moving party, please.
6 MR. KRATOVIL: Yes, Your Honor. Chris
7 Kratovil and Allison Ashmore on behalf of Intervenor and
8 real party and interest EMF Swiss Avenue, LLC. We're
9 with the Dykema Cox Smith firm and we appreciate you
10 taking us in the midst of a jury trial, Your Honor.
11 THE COURT: No problem. For the
12 homeowners association.
13 MR. NORTHRUP: Yes, Your Honor. Mike
14 Northrup for Peaks Addition Homeowners Association.
15 THE COURT: And for the City.
16 MR. ROY: Justin Roy and Stacy Rodriguez.
17 THE COURT: All right. You may proceed.
18 MR. KRATOVIL: Your Honor, Intervenor and
19 real party and interest EMF is here today on an emergency
20 motion and in equity to ask this court to exercise both
21 it's equitable discretion and it's continuing plenary
22 power over a judgment of September 11th 2017. EMF
23 respectfully ask this Court to temporarily suspend the
24 enforcement of that judgment so as to avoid a host of
25 serious and irreparable consequences that will flow from
1 did it?
2 MR. ROY: But the judgment vacates the...
3 THE COURT: My ruling had to do with the
4 appeal of the administrative decision and the procedural
5 problems involved that were brought up and discussed in
6 that appeal. There was no relief requested for me to
7 order a stop work and I didn't order a stop work. In
8 essence they're asking me to interfere with the City's
9 decision. I don't know that that's properly before
10 that's why I asked for your response. I would think if
11 you ordered it, you're going to defend it because I
12 didn't order it. It's not my order.
13 MR. ROY: It was my understanding that the
14 judgment that the relief requested in the summary
15 judgment was to -- was an appeal of the board
16 adjustment's decision as to that permit whether it was
17 valid which vacates that permit essentially.
18 THE COURT: I remember. I was hear for
19 that case. I don't know that you were here arguing, were
20 you?
21 MR. ROY: I wasn't.
22 THE COURT: Yeah, you weren't here arguing
23 it. We went over procedural issues relating to the
24 appeal. I had jurisdictional questions. We went over a
25 lot of things. I didn't order the City to stop work. I
1 decision.
2 MR. KRATOVIL: The only administrative
3 remedy that we're aware of since the board of -- since
4 Your Honor reversed the board of adjustment's ruling
5 would be to seek temporary injunctive relief. If Your
6 Honor is advising us that's what we have to do, we will
7 gladly do so.
8 THE COURT: I'm not giving you legal
9 advice. Based upon the record before me -- I'm
10 sustaining the objection in the affidavit because it's
11 hearsay. I understand the representation that you have
12 made. I think you have to exhaust your administrative
13 remedies with the City's -- with the municipalities'
14 ruling. There's a whole municipality code that goes with
15 these things.
16 Now the flip side is if they go through, I
17 guess the organization is going to be saying they had
18 irreparable harm because the site lines are blocked. So
19 there's going to be irreparable harm either way, I guess.
20 I mean that's the argument. Each side says there's
21 irreparable harm, right?
22 MR. KRATOVIL: Well, Your Honor, the
23 five-story parking garage is already up. So to the
24 extent a blockage would have occurred, it's occurring
25 right now.
1 order.
2 I don't think it's right for me to be able
3 to tell you whether or not you had the right and
4 authority to make that decision or whether or not it was
5 an accurate decision. That's all stuff of the municipal
6 code and administrative procedures act. That's just not
7 before me. The merits of their decision to tell y'all to
8 stop work is just not before me so...
9 MR. KRATOVIL: Just for clarity of the
10 record, I did want to be clear that this was not brought
11 under Rule 329. This is not a motion for new trial.
12 This was purely on a motion to stay. We'll certainly be
13 back with a motion for new trial during the period of
14 plenary power, Your Honor. I just offer that for the
15 record.
16 THE COURT: All right.
17 MR. NORTHRUP: Your Honor, the motion
18 speaks for itself. I have a proposed order. So copies
19 to counsel.
20 THE COURT: What does this say? Well he
21 says it's not broad pursuant to 329b.
22 MR. KRATOVIL: He cited 329b merely to
23 reiterate your plenary power, Your Honor.
24 THE COURT: I understand.
25 MR. KRATOVIL: Your Honor, I have no
1 STATE OF TEXAS
2 COUNTY OF DALLAS
3
4 I, Vielica R. Dobbins, Official Court Reporter in
5 and for the 134th District Court of Dallas, State of
6 Texas, do hereby certify that the above and foregoing
7 contains a true and correct transcription of all portions
8 of evidence and other proceedings requested in writing by
9 counsel for the parties to be included in this volume of
10 the Reporter's Record in the above-styled and numbered
11 cause, all of which occurred in open court or in chambers
12 and were reported by me.
13 I further certify that this Reporter's Record of the
14 proceedings truly and correctly reflects the exhibits, if
15 any, offered by the respective parties.
16 I further certify that the total cost for the
17 preparation of this Reporter's Record is $264.00 and was
18 paid/will be paid by Dykema Cox Smith.
19
20
21 Vielica R. Dobbins, CSR, RPR
Texas CSR No. 6248
22 Official Court Reporter
134th District Court
23 Dallas County, Texas
600 Commerce Street, Suite 650
24 Dallas, Texas 75202
Telephone: (214) 653-7239
25 Expiration: 12/31/2012
EXHIBIT 7
Case 3:17-cv-02995-L Document 1-7 Filed 10/30/17 Page 2 of 13 PageID 141
Plaintiff, Peaks Addition Home Owners Association (Peaks Addition), files this
I. Summary overview
Intervenors motion is brought under Rule 329b and as such, it is legally groundless. No
authority supports using Rule 329b to provide the relief Intervenor seeks.
Just as its motion for continuance failed to state that it had any specific material evidence
on the narrow legal issue before the Court, Intervenors emergency motion fails to advise what
specific and material evidence or arguments Intervenor has that the Court has not already seen
Further, by its proposed order Intervenor seeks a permanent mandatory injunction that
replaces the very building permit that this Courts final judgment invalidates. Intervenor
represents in its motion that the relief is only temporary and only for purposes of allowing it to
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file post-trial motions and having them heard. But Intervenor has filed no such motions and
Intervenor would have no need to do so if the Court signs the order Intervenor has tendered.
Intervenor comes to this Court with an emergency motion, making factually groundless
assertions that it had no opportunity to participate in these proceedings. In fact, Intervenor and
its representatives have known about these proceedings at least since May 2, 2017. They chose
not to participate. They knew about and attended the August 30, 2017 hearing without
intervening. They waited until 3 days prior to the September 11, 2017 hearing to intervene and
represents that the City issued a stop work order because of this Courts September 11, 2017
Final Judgment. Intervenor has no competent evidence to support this conclusion. Even if true,
Intervenor has failed to demonstrate that it has exhausted its administrative remedies and it has
failed to demonstrate that the relief it seeks is the only means by which work may resume at the
construction site. Intervenor is not entitled to equitable relief under these circumstances.
Intervenor must exhaust its administrative remedies before seeking relief in district court.
Finally, not only has Intervenor failed to cite any authority authorizing the relief it
requests, but the authority that exists is contrary to the relief Intervenor seeks. Further,
Intervenor cannot meet the elements of proof required to obtain the relief it seeks even if such
Peaks Addition objects to Intervenors Affidavit of Bradley C. Miller and the documents
The affidavit itself is hearsay and contains hearsay statements within it. Roberts
v. Mullen, 446 S.W.2d 86, 90 (Tex. Civ. App.Dallas 1969, writ refd n.r.e.) (Except in
instances specified by statute or rule (such as summary judgments, pauper's oath proceedings,
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etc.) affidavits are not evidence in contested cases.); see, e.g., Crosby v. Minyard Food Stores,
Inc., 122 S.W.3d 899, 903 Tex. App.Dallas 2003, no pet.) (holding that it was error to admit
affidavit over hearsay objection); see also Millwrits Local Un. v. Rust Engg, 433 S.W.2d 683,
686 (Tex. 1968) (holding that affidavit evidence cannot support injunctive relief if objected to).
owner and developer of the Property. This statement violates the best evidence rule.
it is based upon hearsay, and the affiant has not shown that he is qualified to make this
conclusion. Further, whether the interpretation of the development code was correct is a
Paragraph 9: Peaks Addition objects to the statement that the Board upheld the
decision of the Director of Sustainable Development and Construction with respect to the
inapplicability of the RPS. The sworn return of the Board speaks for itself and the affiants
statement is contrary to the record. The sworn return is the best evidence of what occurred.
Paragraph 11: Peaks Addition objects to affiants statement that the City of
Dalas issued a stop work order in direct response to the Final Judgment issued in this case.
Affiant has not demonstrated that he has personal knowledge as to the reasons and impetus for
the issuance of a stop work order. Further, affiants testimony is necessarily based upon hearsay.
Paragraph 14: Peaks Addition objects to affiants statement that HUD likely
Paragraph 15: Peaks Addition objects to affiants statement that if HUD decided
to issue a red flag, it would immediately freeze the remittance of funds for all other loans
Encore entities have pending with HUD This statement is speculative and affiant has not
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Paragraph 16: Peaks Addition objects to the statement that Encore has twelve
major loans pending with HUD. The best evidence of such loans are the loan agreements
themselves. Further, the testimony is hearsay without the documents referenced attached to the
affidavit. Peaks Addition further objects to the statement that these twelve alleged loans could
Paragraph 17: Peaks Addition objection to affiants conclusion that HUD could
preclude all Encore entities from applying for new HUD and FHA loans for the indefinite future.
Affiant has not demonstrated that he is qualified to provide such testimony. The testimony is
characterizing the Stop Work Order and what it allows or does not allow. The best evidence is
the order itself and further, affiant has not demonstrated that he is qualified to attest to what is or
is not allowed.
Paragraph 22: Peaks Addition objects to affiants conclusory statements that the
Stop Work Order will result in additional interest expense and penalties and that the order
constitutes a very severe compliance infraction with EMFs lenders that could ultimately result
in default. These statements are conclusory and affiant has not demonstrated that he is qualified
to render these conclusions. Peaks Addition also objects to affiants statement that the
homeowners almost certainly would not be able to satisfy economic damages. This statement
is conclusory and speculative and affiant has not demonstrated that he has personal knowledge
twenty years of experience, as affiant has not demonstrated how he is familiar with Encore,
particularly given that he has only been its president for 7 years.
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what the City of Dallas would do if the Court stayed its Final Judgment. This statement is
speculative and conclusory and the statement is legally not sufficient evidence of what it purports
to conclude. Ladymon v. Lewis, No. 05-16-00776-CV , 2017 Tex. App. LEXIS 6849, *12 (Tex.
App.Dallas July 21, 2017, n.p.h.) (An affiants belief about the facts is legally insufficient.).
Paragraph 25: Peaks Addition objects to affiants statement that no harm will
come to Petitioner by maintaining the status quo. This statement is conclusory and speculative
and affiant has failed to demonstrate how he is qualified to make this conclusion.
Peaks Addition requests that the Court sustain each of these objections.
Peaks Addition denies that Intervenor has standing. Intervenor claims to be the property
owner. The sworn record before the Court reflects otherwise. The Defendants sworn return
pursuant to the writ of certiorari states that the Property Owner and holder of the permit that is at
affidavit recites that EMF is the owner and developer of the Property. The affiant does not
define who EMF is, however, there are two entities that are mentioned in the affidavit that are
described in the affidavit using different names from Intervenor, EMF Swiss Avenue, LLC.
Peaks Addition demands strict proof from the Intervenor demonstrating that it is in fact the
Intervenors emergency motion states that it is based upon Tex. R. Civ. P. 329bthe
rule applicable to motions for new trial and motions to correct, reform, or modify. But
Intervenor is not seeking modification, correction, or reformation. Thus, the motion must be a
motion for new trial. Rule 329b is not authority for a stay of enforcement of the Courts final
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judgment. Plaintiff has been unable to find any case authority that cite Rule 329b as a basis for
the relief requested in Intervenors motion. Intervenor has not cited any such case authority.
Further, assuming it is Intervenors unstated intent to treat its motion as a motion for new
trial following a default, Intervenor has not alleged and cannot meet the elements of proof for
such a motion. Indeed, as is evidenced by Plaintiffs notice of these proceedings given on May
Intervenor had notice and consciously chose not to act. Further, Intervenor has not asserted a
meritorious defense and cannot establish that Plaintiff will not suffer any injuryparticularly in
To the extent Intervenor is asking this Court to stay its judgment to postpone appellate
deadlines, the request is improper. See Mackie v. McKenzie, 890 S.W.2d 807, 808 (Tex. 1994).
Stop Work Order as enforcement of this Courts summary judgment order is incorrect and
Peaks Addition has taken no action to enforce the Courts Final Judgment. The
Stop Work Order on September 14, 2017. Intervenor presents no competent evidence that this
Stop Work Order was issued as a result of any action by Peaks Addition, and Intervenor does
not plead that Peaks Addition had any hand in the Stop Work Order. Intervenor represents that
the Stop Work Order result[ed] from the Final Judgment, but Intervenor presents no competent
evidence to support that assertion. Intervenor uses the Stop Work Order as the grounds by
which it seeks to stay this Courts September 14, 2017 Order. These are two separate events.
On its face, the Stop Work Order purports to have been issued by the City of Dallas,
but it does not give the reason for its issuance. Intervenors affiant has failed to demonstrate that
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he has personal knowledge as to the reason for its issuance or whether the order might be
rescinded even if no action is taken by this Court. Moreover, Intervenor asks this Court to accept
the sworn belief of the affiant that if the Court would stay its Final Judgment, the Citys
administrative official will withdraw the Stop Work Order. A sworn belief is not competent
evidence. Ladymon No. 05-16-00776-CV , 2017 Tex. App. LEXIS 6849, at *12.
If the Intervenor disagrees with the stop-work order, Intervenor has an administrative
remedy and it is required to exhaust its administrative remedies. If Intervenor believes the
building official should not have stopped work on the entire project or that Intervenor should be
permitted to wind down activities, the Dallas Development Code provides a mechanism for
challenging the stop-work order. See Dallas Dev. Code 51A-4.703(a)(2). Intevenor cannot
skip that administrative mechanism by going directly to this Court to challenge the stop work
order. 1 See Sumner v. Board of Adjustment, No. 14-15-00149-CV, 2016 Tex. App. LEXIS 5173,
*6 (Tex. App.Houston [14th Dist.] May 17, 2016, pet. denied); see also Plaintiffs
VI. Intervenors Emergency Motion Lacks Supporting Pleadings, Facts, and Authority
Intervenors Motion lacks both legal and factual authority to support it, and the authority
is to the contrary to the relief requested. Intervenor cites no authority requiring this Court to
grant it the relief it seeks. Further, the factual assertions that Intervenor continues to recitethat
it had no opportunity to take part in these proceedings is factually groundless. Moreover, the law
Intervenor had notice of these proceedings at least since May 2, 2017. Intervenors
contentions that it had no notice of these proceedings, no opportunity to participate, and that it
had no advance notice that the City might order it to cease work on the construction site are not
1
Further, Intervenor has not asserted that it falls within any exception to the exhaustion-of-
administrative-remedies requirement.
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for Continuance, the entity holding the permit that was challenged by Peaks Additions appeal
to this Court was advised of these proceedings so that a decision could be made whether to
participate or not participate. Clearly, Intervenor elected not to participate but instead monitored
the proceedings.
There is no authority authorizing a stay of a Courts order issued under Texas Local
Government Code Section 211.011. As this Court is aware from the prior supplemental
briefing, the procedure for review of a municipal Board of Adjustment is unique. See Board of
Adjustment v. Stovall, 216 S.W.2d 171, 172 (Tex. 1949); San Angelo v. Boehme Bakery, 190
S.W.2d 67, 69 (Tex. 1945). Intervenor has cited no case authority authorizing a stay of a district
courts order issued under the procedures outlined in the Local Government Code. Moreover,
Peaks Addition has been unable to find any authority that supports such a stay. Rule 329b,
under which Intervenor says its motion is brought, does not support the granting of a stay.
Further, the Texas Local Government Code forbids the very relief Intervenor is
violation of the subchapter or City ordinances, the municipality may institute an action to restrain
such activity. Tex. Loc. Govt Code 211.012(c); see also Tex. Civ. Prac. & Rem. Code
65.013 (generally forbidding use of injunction to stay a judgment); In re Lowery, No. 05-14-
01509-CV, 2014 Tex. App. LEXIS 13633, *6 (Tex. App.Dallas Dec. 18, 2014, orig.
proceeding) (holding that Section 65.013 allows injunction to stay a judgment that is not
appealable at law). Thus, if the City of Dallas stop work order was issued under the authority
of Local Government Code Chapter 211 or City Ordinance, then the City of Dallas had a legal
right to do so. Countermanding the exercise of that authority by court order would be contrary to
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Intervenor is seeking a mandatory injunction that replaces the invalid permit but
Intervenor does not satisfy the required elements. Intervenors emergency motion is a request
for mandatory injunctive relief in all but name. Intervenors request for a stay is based upon
principles of equity. See Garland v. Shepherd, 445 S.W.2d 602, 604 (Tex. Civ. App.Dallas
1969, no writ). As the party seeking injunctive relief, Intervenor must present proof (1) of a
wrongful act; (2) imminent harm; (3) irreparable injury; and (4) the absence of an adequate
remedy at law. Pinebrook Props., Ltd. v. Brookhaven Lake Prop. Owners Ass'n, 77 S.W.3d 487,
505 (Tex. App.Texarkana 2002, pet. denied). Intervenor does not allege that the Citys stop
work order was wrongful. Indeed, if the City issued such a work order based upon the Courts
Final Judgment, then that act was expressly authorized, as discussed above. Further Intervenor
Intervenor is barred by its own acts of delay and unclean hands. Further, even if Intervenor
had established a right to injunctive relief, Intervenors own delay in seeking relief and unclean
hands preclude affording it any relief. Foxwood Homeowners Asso. v. Ricles, 673 S.W.2d 376,
379 (Tex. App.Houston [1st Dist.] 1984, writ refd n.r.e.). Indeed, Intervenor persists in its
groundless assertion that it lacked any opportunity to participate, but as Peaks Additions
Response in Opposition to Intervenors Motion for Continuance shows, Intervenor was made
aware of these proceedings and invited to participate if it so chose as far back as May 2, 2017.
Moreover, Intervenors agents attended the summary judgment hearing held on August 30, 2017.
Even so, Intervenor still refused to intervene until 3 days before the continued hearing on the
parties summary judgment motions. But even when Intervenor did intervene, its pleadings
show that it was well aware of the fact that if this Court granted Peaks Additions motion for
summary judgment, work at 4217 Swiss Avenue might be halted. Thus, Intervenors contention
that the Citys Stop Work Order caught them by surprise and did not allow them to wind down
any work at 4217 Swiss Avenue, is contrary to its own pleaded expectations.
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Intervenors assertions as to the status quo are incorrect. The purpose of a temporary
injunction is to preserve the status quo until a trial on the merits. Frequent Flyer Depot, Inc. v.
Am. Airlines, Inc., 281 S.W.3d 215, 222 (Tex. App.Fort Worth 2009, pet. denied).
Intervenors emergency motion rests upon the unsupported assumption that the status quo is
continued construction of its five-story development. The law does not support this contention.
Further, Intervenors analysis conflates a stay of the Courts Final Judgment with a stay of the
judgment is to invalidate the permit (Permit No. 1512041028) that is the subject of this suit. It is
well settled that the status quo does not include continuation of illegal conduct. In re Newton,
146 S.W.3d 648, 651 (Tex. 2004); Layton v. Ball, 396 S.W.3d 747, 753 (Tex. App.Tyler 2013,
no pet.). Here, the Court has adjudicated the question presented in Peaks Additions petition.
Intervenor now wishes to treat that adjudication as a nullity for purposes of the injunctive relief
its seeks insofar as keeping the City from issuing a stop work order based upon the Courts
ruling. But doing so allows Intervenor to keep engaging in the illegal conduct, which is not
Intervenor has no competent evidence that Plaintiff will not be harmed by continued
construction. Intervenors affiant is not competent to testify that Plaintiff will not be harmed by
continued construction at 4217 Swiss Avenue. On more than one occasion, the City Council has
concluded and reaffirmed that Plaintiffs constituent members homes are of historical, cultural
and architectural importance and are significant such that they must be protected. See, e.g.,
Dallas Ordinance No. 22352 (Mar. 8, 1995); see also Dallas Dev. Code 51A-4.702(a)(1)
(expressing that the purpose of a PD is to protect[] contiguous land uses and preserve[]
significant natural features). The very concept of the residential proximity slope is that it
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protects the properties in whose favor it operates; COD-BDA-0036, 0171; thus, the very idea
Wherefore, premises considered, Plaintiff requests that the Court deny Intervenors
Emergency Motion to Stay Enforcement of the Courts Final Judgment in all things. Intervenor
requests such further and additional relief to which it has shown itself entitled.
Respectfully submitted,
By: __________________________________
R. MICHAEL NORTHRUP
Texas Bar No. 15103250
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CERTIFICATE OF SERVICE
The undersigned certifies that on the 18th day of September, 2017, a true and correct
copy of the foregoing document was delivered via electronic delivery and hand-delivery to the
_______________________________
R. Michael Northrup
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JS 44 (Rev. 06/17) - TXND (Rev. 06/17) CIVIL COVER
Case 3:17-cv-02995-L Document 1-8 FiledSHEET
10/30/17 Page 1 of 2 PageID 153
The JS 44 civil cover sheet and the information contained herein neither replace nor supplement the filing and service of pleadings or other papers as required by law, except as
provided by local rules of court. This form, approved by the Judicial Conference of the United States in September 1974, is required for the use of the Clerk of Court for the
purpose of initiating the civil docket sheet. (SEE INSTRUCTIONS ON NEXT PAGE OF THIS FORM.)
(b) County of Residence of First Listed Plaintiff DALLAS DIVISION County of Residence of First Listed Defendant DALLAS DIVISION
(EXCEPT IN U.S. PLAINTIFF CASES) (IN U.S. PLAINTIFF CASES ONLY)
NOTE: IN LAND CONDEMNATION CASES, USE THE LOCATION OF
THE TRACT OF LAND INVOLVED.
(c) Attorneys (Firm Name, Address, and Telephone Number) Attorneys (If Known)
Alison R. Ashmore Justin H. Roy, Stacy Rodriguez, Dallas City Attorney's Office
Dykema Cox Smith, 1717 Main Street, Suite 4200, Dallas, TX 75201 1500 Marilla Street, 7DN Dallas City Hall, Dallas, TX 75202
II. BASIS OF JURISDICTION (Place an X in One Box Only) III. CITIZENSHIP OF PRINCIPAL PARTIES (Place an X in One Box for Plaintiff
(For Diversity Cases Only) and One Box for Defendant)
1 U.S. Government 3 Federal Question PTF DEF PTF DEF
Plaintiff (U.S. Government Not a Party) Citizen of This State 1 1 Incorporated or Principal Place 4 4
of Business In This State
2 U.S. Government 4 Diversity Citizen of Another State 2 2 Incorporated and Principal Place 5 5
Defendant (Indicate Citizenship of Parties in Item III) of Business In Another State
The JS 44 civil cover sheet and the information contained herein neither replaces nor supplements the filings and service of pleading or other papers as
required by law, except as provided by local rules of court. This form, approved by the Judicial Conference of the United States in September 1974, is
required for the use of the Clerk of Court for the purpose of initiating the civil docket sheet. Consequently, a civil cover sheet is submitted to the Clerk of
Court for each civil complaint filed. The attorney filing a case should complete the form as follows:
I.(a) Plaintiffs-Defendants. Enter names (last, first, middle initial) of plaintiff and defendant. If the plaintiff or defendant is a government agency,
use only the full name or standard abbreviations. If the plaintiff or defendant is an official within a government agency, identify first the agency and
then the official, giving both name and title.
(b) County of Residence. For each civil case filed, except U.S. plaintiff cases, enter the name of the county where the first listed plaintiff resides at
the time of filing. In U.S. plaintiff cases, enter the name of the county in which the first listed defendant resides at the time of filing. (NOTE: In land
condemnation cases, the county of residence of the "defendant" is the location of the tract of land involved.)
(c) Attorneys. Enter the firm name, address, telephone number, and attorney of record. If there are several attorneys, list them on an attachment,
noting in this section "(see attachment)".
II. Jurisdiction. The basis of jurisdiction is set forth under Rule 8(a), F.R.Cv.P., which requires that jurisdictions be shown in pleadings. Place an
"X" in one of the boxes. If there is more than one basis of jurisdiction, precedence is given in the order shown below.
United States plaintiff. (1) Jurisdiction based on 28 U.S.C. 1345 and 1348. Suits by agencies and officers of the United States are included here.
United States defendant. (2) When the plaintiff is suing the United States, its officers or agencies, place an "X" in this box.
Federal question. (3) This refers to suits under 28 U.S.C. 1331, where jurisdiction arises under the Constitution of the United States, an amendment
to the Constitution, an act of Congress or a treaty of the United States. In cases where the U.S. is a party, the U.S. plaintiff or defendant code takes
precedence, and box 1 or 2 should be marked.
Diversity of citizenship. (4) This refers to suits under 28 U.S.C. 1332, where parties are citizens of different states. When Box 4 is checked, the
citizenship of the different parties must be checked. (See Section III below; NOTE: federal question actions take precedence over diversity
cases.)
III. Residence (citizenship) of Principal Parties. This section of the JS 44 is to be completed if diversity of citizenship was indicated above. Mark
this section for each principal party.
IV. Nature of Suit. Place an "X" in the appropriate box. If there are multiple nature of suit codes associated with the case, pick the nature of suit
code that is most applicable. Click here for: Nature of Suit Code Descriptions.
VI. Cause of Action. Report the civil statute directly related to the cause of action and give a brief description of the cause. Do not cite
jurisdictional statutes unless diversity. Example: U.S. Civil Statute: 47 USC 553 Brief Description: Unauthorized reception of cable service
VII. Requested in Complaint. Class Action. Place an "X" in this box if you are filing a class action under Rule 23, F.R.Cv.P.
Demand. In this space enter the actual dollar amount being demanded or indicate other demand, such as a preliminary injunction.
Jury Demand. Check the appropriate box to indicate whether or not a jury is being demanded.
VIII. Related Cases. This section of the JS 44 is used to reference related pending cases, if any. If a related case exists, whether pending or closed,
insert the docket numbers and the corresponding judge names for such cases. A case is related to this filing if the case: 1) involves some or all of the
same parties and is based on the same or similar claim; 2) involves the same property, transaction, or event; 3) involves substantially similar issues of
law and fact; and/or 4) involves the same estate in a bankruptcy appeal.
Date and Attorney Signature. Date and sign the civil cover sheet.